Buy 150 million shares for Rs 2,000 crore in 73 BSE-500 companies.

The equity market sentiment may be weak, but promoters seem to be showing confidence in their listed firms. Promoters of top corporate houses or groups such as Tata, Bajaj, Vedanta, Anil Ambani’s Reliance group, Mahindra & Mahindra, Bharti, Jindal and Jaypee, put together, have together spent about Rs 2,000 crore to increase holding in their companies in the September quarter.

Experts say such a trend of promoters increasing their holding has not been seen in recent quarters, adding lower stock prices and a desire to enhance control or reinforce investor confidence prompted them to raise their holdings. Among the prominent companies, promoters of Mahindra & Mahindra, Tata Motors, Tata Steel, TCS, Sterlite Industries, Bharti Airtel, Bajaj Holdings and Jindal Steel & Power have acquired shares in their own companies through open market purchases in the quarter ended September (Q3), as the equity market reported its sharpest quarterly fall in the past two and a half years. The BSE Sensex lost 12.7 per cent during the quarter, its worst quarterly loss since the December 2008 quarter (when the index crashed 25 per cent due to the global financial crisis).

“Promoters hiking stakes indicates confidence in their companies and sends a positive signal to investors. They have benefited from market regulator Securities and Exchange Board of India’s revised guidelines on creeping acquisitions,” says Jagannadham Thunuguntla, strategist & head of research, SMC Global Securities.

Promoters may want to hike their stake to increase management control over the company, support plummeting share prices, or simply because they find a certain price level attractive to raise their stake as they can foresee a positive future for the company and have the cash to back it up, he says.

By Sebi regulation, a promoter can buy up to five per cent equity of his company in any particular year from the stock market through the creeping acquisition route, to increase stake up to 75 per cent.

“The promoters know more about their company. The increase in promoters’ holdings is a clear signal of the value present in companies after the correction witnessed in their stock prices over the last few quarters,” said Ashish Mittal, fund manager, PMS, Centrum Wealth Management. For more visit: Business Standard

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