Share purchases by promoters lift sentiment on D-St | Economic Times

Mumbai: Promoters have been mopping up shares of their firms in the secondary market of late, signalling optimism about their companies’ prospects amid challenging economic conditions.Since August 1, promoters of nearly 70 companies — mostly from mid- and small-cap segments — have increased their stakes. Some large companies, whose shares have been beaten down, too saw their promoters raising their holdings through open market purchases.For instance, Kumar Mangalam Birla-owned IGH Holdings bought 43.45 lakh shares of Grasim Industries worth Rs 313 crore last week. Grasim is currently trading at a price to earnings (PE) — a widely-watched valuation measure — of 11 times compared to its five-year average PE of 30.78225853Tata Sons bought 58 lakh shares of Tata Motors valued at 33 crore from the open market early this month. Though Tata Motors shares have rallied 44 per cent since August 1, it is available 27 per cent cheaper compared to its 52-week high price. Japanese auto major Suzuki Motor Corporation acquired 2.84 lakh shares of Maruti Suzuki valued Rs 204 crore last week though the company’s valuations are considered rich.“Market volatility is offering promoters an opportunity to raise stake in their companies,” said Gaurav Dua, head —capital market strategy, Sharekhan. “It is a positive indicator for the minority shareholders’ perspective as it reflects the management’s confidence in the company and its growth outlook.”Among the prominent mid-cap companies, Welspun India, Chambal Fertilisers, Alembic, KEC International, Trident, Bajaj Auto, Somany Ceramics, among others, have seen promoters buying shares through open market purchases since August 1. While Nifty gained 4 per cent during the same period, Nifty Midcap 100 and Smallcap 100 indices rallied 12 per cent and 20 per cent, respectively.