The promoters of mid, small-sized companies and high net worth individual investors have grabbed the opportunity of recent equity market fall by accumulating shares of these companies through open market purchases.
Including, Rakesh Jhunjunwala and V Vaidyanathan, the promoters of more than fifty companies collectively acquired 11.4 million equity shares worth of Rs 75 crore from the open market purchases in past one week, as per data available from the stock exchanges.
Most of the mid and small-cap stocks took a beating at the bourses in recent times with prices of several of them frozen on the downside after the market regulator Securities and Exchange Board of India (Sebi) stepped up vigilance' to check market malpractices.
The Bombay Stock Exchange (BSE), mid-cap and small-cap indices fell more than 6% each during the week, as compared to 2% drop in the benchmark index Sensex.
Ekta Kapoor of Balaji Telefilms, Hindustan Times of Chambal Fertilisers, GMR Holdings Private Limited of GMR Infrastructure, Anand Saranaik of Glodyne Technoserve, Partha Gems LLP of Gitanjali Gems and Aggarwal brothers of Orbit Corp are among the few promoters of mid- and small-cap companies acquired their companies' shares via creeping acquisitions route.
Including Ruchi Soya and K S Oils, which suspected insider trading in the report prepared by Intelligence Bureau (IB) are also in the buyers list.
The promoters want to send a positive signal to their shareholders that they are bullish about their respective companies is the main reason for promoters to buy more shares of their own company during a downturn in stock prices. The few are acquiring the stakes to strengthen their holdings beyond the 50% mark to ward off hostile take-over attempts.
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Glodyne Technoserve, promoters increases their holding to 60.70% from 58.89% earlier by acquiring 433,000 shares after the market price of the company shares fell over 40% within a week, saying that the fundamentals of the company are strong which is based on our robust business models and have full confidence on the future growth of the company.
M/s VS NET Ltd. in concert with Baghmar Finlease Ltd., AIWO Ltd. and Ratha Infrastructure Pvt. Ltd has purchased 129,886 shares of Ruchi Soya Industries at price of Rs 91.20 per share on December 8 and Shiva Trade Consultancy, Baghmar Finlease, Saravana Enterprises and Ratha Infrastructure collectively bought 3.13 million shares representing 3.22% stake of K S Oils during the period.
Rakesh Jhunjunwala, a high net worth individual investors has bought 500,000 shares of Delta Corp and V Vaidyanathan purchased 28,000 shares of Future Capital from open market purchase in last week.
As per the regulations, promoters of companies can buy shares of their company from the stock market through the creeping acquisition route. But, in any given year, they can only buy up to 5% equity of the company through this window.