As Stocks Nose­dive in 2016, Co In­sid­ers Mop Up Shares

Pro­mot­ers or top of­fi­cials buy shares of their com­pa­nies, it could mean that the shares are go­ing cheap, or that they see a bright fu­ture

The Economic Times - - Smart -

Mum­bai: The fall in stock prices in the first two months of 2016 en­cour­aged com­pany in­sid­ers — pro­mot­ers and top ex­ec­u­tives — to mop up shares of firms they own or work in, ac­cord­ing to an ET study of BSE-listed com­pa­nies. The ra­tio of in­sider buy­ing to sell­ing picked up to 1.33 times in Jan­uary-March com­pared to 0.56 dur­ing the April-De­cem­ber 2015 pe­riod and 1.11 in FY14-15.

Pi­ra­mal En­ter­prises, Adani Power, Bharti Air­tel, Kan­sai Nero­lac, Grasim, HDFC Bank and Axis Bank were among the stocks that saw in­sid­ers buy­ing in a big way. Mean­while, in­sid­ers sold Pipavav De­fence, United Brew­eries, ITC, Unitech, In­tra­soft Tech­nolo­gies and KSK En­ergy Ven­tures.

The BSE Sen­sex fell nearly 12% in Jan­uary and Fe­bru­ary this year be­fore re­cov­er­ing about 10% in March. The BSE Mid­cap and Smal­lcap in­dexes too, fell 14% and 19% be­tween Jan­uary and Fe­bru­ary be­fore re­cov­er­ing 10% each in March.

When­pro­mot­er­sor­topof­fi­cials­buy share­sof their com­pa­nies, it could be in­ter­preted in dif­fer­ent ways. It could mean that these shares are go­ing cheap, or that they see a bright fu­ture. Some pro­mot­ers buy to re­verse the de­clin­ing share prices.

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