The Nifty has declined nearly 3% in the past month - and 4.6% in the past week. The Nifty Midcap 100 and Nifty Smallcap 100 indices have plunged more than 5% in a week after foreign portfolio investors sold shares worth ₹16,000 crore since the latest increase in interest rates by the US Federal Reserve.
iStock"As an insider, promoters would know the underlying value of their business, and hence they see long-term value in its stock price," said G Chokkalingam, the founder and chief executive of Economics Research & Advisory.
Mumbai: The Adani Group and the Godrejs are among the promoters that have raised stakes in their companies recently, timing their open-market purchases with the broad-based equities downturn that hasn't spared any pocket of the listed universe over the past month.
The Nifty has declined nearly 3% in the past month - and 4.6% in the past week. The Nifty Midcap 100 and Nifty Smallcap 100 indices have plunged more than 5% in a week after foreign portfolio investors sold shares worth ₹16,000 crore since the latest increase in interest rates by the US Federal Reserve.
Analysts said the decline in valuations in some stocks encouraged promoters to buy shares, which is another way to assure investors about their companies' long-term prospects.
"Price and valuations have had corrections in some of the sectors recently, and that would have prompted promoters to buy shares as they might have considered the current price below the companies' long-term intrinsic value," said AK Prabhakar, head of research, IDBI Capital. "Buying by promoters themselves showcases their confidence in the economic recovery and its benefit to their firms."
Gautam Adani-led Adani group bought shares in Adani Enterprises and Adani Green worth ₹1,137 crore and ₹935 crore, respectively, in September. the National Stock Exchange (NSE) has announced the replacement of Shree Cement with Adani Enterprises in the benchmark index Nifty 50 from September 30.
Mentor Capital, the promoter of Authum Infrastructure and Investment, bought shares worth ₹41 crore this month in seven transactions. The Zydus Family Trust has been consistently buying shares in Zydus Wellness.
Similarly, promoters of Mangalam Cement, DB Corp, and India Pesticides also bought shares worth ₹15-20 crore.
Securities and Exchange Board of India (Sebi) regulations permit a promoter to purchase up to 5% equity of a company in any financial year from the secondary market through the creeping acquisition route.
Shares of some companies where promoters increased their shares have dropped in the last few months. According to analysts, promoters believe the fundamentals of the companies may be overshadowed by temporarily weak market sentiment.
"As an insider, promoters would know the underlying value of their business, and hence they see long-term value in its stock price," said G Chokkalingam, the founder and chief executive of Economics Research & Advisory.
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