Market Insights | Who is getting it right — promoters or investors?

Contextually, the value of promoter shares sold has achieved a twofold increase compared to the preceding calendar year, and is the highest selling we have seen from promoter entities in a calender year.

Notably, this evaluation occurs with the caveat that four months still remain in the year.

When comparing promoter sales to the average market cap over a calendar year, the percentage levels are comparable to those of 2020. However, the average market capitalisation in 2023 has doubled compared to its value in 2020.

In August, 2023, the market observed a substantial volume of promoter selling, reaching around $2.9 billion in value. Adani stood out as the major contributor to this trend, further supported by the significant investments made by the GQG fund in the group. Noteworthy transactions also involved prominent companies such as Interglobe Aviation, Vedanta Limited, and CMS Info.

One perspective is that it highlights the robustness of the Indian markets, underscoring why India might be favoured over other emerging markets. Conversely, one might also contemplate whether promoters, as the foremost experts on their own stocks, selling shares could trigger unease among investors.

Nevertheless, in specific instances, this selling could effectively release capital, potentially aiding the reduction of leverage on the promoter entities' balance sheets and enhancing their ability to manage the company effectively.