Stocks where promoters have increased stake via the creeping acquisition method during September-March 2009 seem to be catching the eyes of shrewd investors.
Stocks of several large-cap companies and mid-cap companies, where promoters have increased stake, have moved up during the current rally reflecting investor confidence. As per Sebi regulations promoters can increase their stake through the open market by 5% every year.
Clearly, it was a tough period for both the Indian as well as global economy. Capital was scarce and big economies like the US had to pump in several billion dollars to bail out companies. Despite these tough conditions , globally several promoters have raised stake, inspiring confidence in the company.
While in cases where shareholding is low, an increase in holding helps a promoter ward off any takeover threat, otherwise too, an increase in stake is perceived positively by investors as it indicates confidence of a promoter in his own company.
Take the case of Reliance Communications , where the promoters have marginally increased their stake by 1.22% by buying 2.05 crore shares, saw its stock price spurt from Rs 232 to Rs 304, a rise of 31%.
Mahindra and Mahindra promoters bought 1.29 crore shares, increasing the promoter stake to 29.20%, with the stock moving up from Rs 514 to Rs 626, a gain of 22%. RPG Group company, Ceat, where the promoters holding increased by 4.82% to 48%, by buying 16.5 lakh shares saw its stock price increase from Rs 58 to Rs 88, a gain of 83%.
Aditya Birla Nuvo, where the promoters bought 12.5 lakh shares, or increased their stake by 1.32%, saw its price move from Rs 550 to Rs 872, a whopping 58%. Videocon Industries saw the promoter buying 9 lakh shares during the period .
The stock price moved up from Rs 114 to Rs 169, a rise of 48%. Tata Elxsi, where the promoters bought 1.38 crore shares, saw its price moving from Rs 124 to Rs 150 a gain of 21%. Bajaj Hindusthan, where the promoters bought 10 lakh shares, saw its price spurt from Rs 108 to Rs 136, a gain of 26%.
Besides this, there are a host of mid-cap companies, where promoters have increased their stake by buying from the open market. Some examples are Simplex Infra, where promoters increased their stake by 4.8% saw its price zoom from Rs 211 to Rs 390, an 85% gain and Vinati Organics where promoters increased stake by 3.74% saw its stock price rise from Rs 90 to Rs 130, a gain of 44%.
JBF Industries , in which promoters increased their stake by 4.74% to 42.92%, saw its stock move from Rs 43 to Rs 67, a gain of 56%. “A promoter best knows what is happening in the company and if he is increasing his stake in the company, it shows great confidence and increases investor faith” , says Alok Churiwala, managing director, Churiwala Securities.
Stocks of several large-cap companies and mid-cap companies, where promoters have increased stake, have moved up during the current rally reflecting investor confidence. As per Sebi regulations promoters can increase their stake through the open market by 5% every year.
Clearly, it was a tough period for both the Indian as well as global economy. Capital was scarce and big economies like the US had to pump in several billion dollars to bail out companies. Despite these tough conditions , globally several promoters have raised stake, inspiring confidence in the company.
While in cases where shareholding is low, an increase in holding helps a promoter ward off any takeover threat, otherwise too, an increase in stake is perceived positively by investors as it indicates confidence of a promoter in his own company.
Take the case of Reliance Communications , where the promoters have marginally increased their stake by 1.22% by buying 2.05 crore shares, saw its stock price spurt from Rs 232 to Rs 304, a rise of 31%.
Mahindra and Mahindra promoters bought 1.29 crore shares, increasing the promoter stake to 29.20%, with the stock moving up from Rs 514 to Rs 626, a gain of 22%. RPG Group company, Ceat, where the promoters holding increased by 4.82% to 48%, by buying 16.5 lakh shares saw its stock price increase from Rs 58 to Rs 88, a gain of 83%.
Aditya Birla Nuvo, where the promoters bought 12.5 lakh shares, or increased their stake by 1.32%, saw its price move from Rs 550 to Rs 872, a whopping 58%. Videocon Industries saw the promoter buying 9 lakh shares during the period .
The stock price moved up from Rs 114 to Rs 169, a rise of 48%. Tata Elxsi, where the promoters bought 1.38 crore shares, saw its price moving from Rs 124 to Rs 150 a gain of 21%. Bajaj Hindusthan, where the promoters bought 10 lakh shares, saw its price spurt from Rs 108 to Rs 136, a gain of 26%.
Besides this, there are a host of mid-cap companies, where promoters have increased their stake by buying from the open market. Some examples are Simplex Infra, where promoters increased their stake by 4.8% saw its price zoom from Rs 211 to Rs 390, an 85% gain and Vinati Organics where promoters increased stake by 3.74% saw its stock price rise from Rs 90 to Rs 130, a gain of 44%.
JBF Industries , in which promoters increased their stake by 4.74% to 42.92%, saw its stock move from Rs 43 to Rs 67, a gain of 56%. “A promoter best knows what is happening in the company and if he is increasing his stake in the company, it shows great confidence and increases investor faith” , says Alok Churiwala, managing director, Churiwala Securities.
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