Promoters raised stake in 23 BSE 500 companies in June quarter; should you buy?

Promoters buying into their stocks from the equity market is generally a sign of confidence. That is why it makes sense to study more about it before lapping up such stocks. Initial shareholding data showed that promoters of at least 23 BSE 500 companies raised their stake in the June quarter when the benchmark equity index BSE Sensex cracked 9.48 per cent.

Among the major buying done by promoters in Q1FY23, promoters of Mahindra CIE Automotive upped their stake to 74.87 per cent from 72.17 per cent in the previous quarter ended March 31. Shares of the company have advanced 1.80 per cent on a year-to-date basis till July 14, 2022. It is one of the top global forging players with a strong presence in both Europe and India. At present, two-thirds of the revenue comes from Europe, while the rest is from India.

NCC Ltd is next on the list. Promoters increased their stake in the company to 21.99 per cent as of June 30, 2022 from 19.68 per cent in the March quarter. Shares of the company have plunged nearly 19 per cent year-to-date.

Ricky Kirpalani, lead sponsor, First Water Capital Fund (AIF) said, “As part of our screening process and with our investee companies, we tend to look at the quarterly updates to see if there have been any changes in shareholder patterns.”

“Buying of shares by promoters is a sign of confidence and it shows that they are willing to increase skin in the game. We also look at what FIIs and DIIs are doing to see what the general mood is around the company and try to understand why they are increasing or decreasing their stake,” he said. 

Data further highlighted that Uflex, VIP Industries, Lux Industries, Lupin, Nuvoco Vistas Corporation, Jindal Stainless, IRB Infrastructure Developers, KRBL, KNR Constructions, Atul, GAIL (India), ITI, IIFL Wealth Management, Zensar Technologies, Amber Enterprises India, Hero MotoCorp, JSW Energy, JK Cement, Ambuja Cements, JSW Steel and CSB Bank stood among other major players in which promoters increased their holdings during the June quarter.

“Investors should consider it as one of the criteria while shortlisting the stock,” Kirpalani said.  

(Note: Complete shareholding data is yet to be announced)

Also read: FIIs, LIC increase stake in this multibagger chemical stock; do you own it?

Also read: Majority of portfolio managers for HNIs failed in June; here’s how