Massive drop in holdings by promoters with a rally in the stock market

MUMBAI: As the stock market picks up, promoters of companies, top bankers or bigwigs familiar with the company's internal affairs are discussing a reduction in their shareholdings. Over the last three months, so-called big heads have been discussing offloading goods worth about Rs 2,000 crore in the market. However, there could be a number of reasons behind this, said one analyst.

The promoters of the company either sell the goods at a higher price and use the money to expand their operations or to meet their other needs.

According to the information received, goods worth Rs 11,000 crore were destroyed in July by shareholders with knowledge of the companies. According to market sources, goods worth Rs 2,000 crore were sold in May and June each.

The top officials of the banks that deal with the companies are the ones who are well aware of the movements of that company. In other words, bankers are aware of the inside information of companies. At a time when the stock market is booming, the shares of many small and medium-sized companies are trading at unnecessarily high levels. Insiders have been seen taking advantage of the high prices many times before, the analyst said, adding that there was nothing new in this.

However, not only should retail investors be alert when insiders are selling goods in bulk, but it would also be important for them to know the true value of stocks held by retail investors, the analyst added. The companies' June quarterly results, though modest, have seen the stock market rebound, which is a red light.