Insiders in 60 small, big cos lap up shares in bear run

As markets buckled under pressures, company promoters, their relatives, directors, employees and employee trusts have opened their purses to snap up shares at a discount. Categorised as 'insiders', these entities over the past few sessions have done over 180 transactions, buying as many as 1.78 crore across 60 companies, trades reported to the stock exchanges show. An analysis of such trades shows that in many of the cases, insiders have tried to increase their holding as the stocks became cheaper post the recent correction, which has already shaved off over 2200 points in the Sensex since closing at a new peak on January 29.

In about 48 companies i.e. 80% of analysed stocks, the promoter, promoter & director, or promoter's immediate relative have bought shares. These companies include Lumax Industries, Gyscoal Alloys, Alembic Pharmaceuticals, A K Capital Services, Escorts, Dabur India, Hester Biosciences, Rathi Bars, Kewal Kiran Clothing, Ashoka Buildcon, Arvind, KCP Sugar, Atul, Adani Ports and Special Economic Zone, Man Infraconstruction, Ruchi Infra, Raymond, Adani Power and Vishal Fabrics.

"Promoters of small and mid-sized companies often use margin funding to conduct share trading activity. So, some purchases or disposals could be linked to margin calls. Others want to give an impression to the market that they see value in stock price, and that is why you may see them buying equity. That happens when the stock is trading high or has corrected quickly," said the chief treasury dealer of a PSU bank.

Market experts point out that a much larger list of stocks would have been on the shopping list when it comes to insiders, and these transactions may be reported to exchanges over the next few sessions. In the last five days, some of the companies like A K Capital (down 6%), Adani Ports, and Kewal Kiran (both down 4%) have stayed consistently low.

Besides, in a quite a number of transactions, employees and employee benefit trusts have actively acquired shares of their companies. Notable examples can be seen in the cases of S H Kelkar and Company Ltd with SH Kelkar Employee Benefit Trust buying shares on almost every session between 30 January to February 7. The stock has corrected by 5% in five sessions.

"In many cases, insiders have also bought shares that were also going up price-wise. Individuals will have different reasons to buy shares. Prevailing market sentiment could be a trigger to buy more than planned amounts. Companies involved in the pharmaceutical sector are considered a safe-haven during bear runs. So, it's natural that insiders of such firms will heighten purchases," said a veteran broker.

Similarly, eClerx Employee Welfare Trust (five-day loss in eClerx is 9.5%) and Gravita Employee Welfare Trust bought some shares during this phase. Individual employees in Sterlite Technologies, YES Bank (down 6.5% in last 5 days), L&T (down 5.8%), Biocon, AU Small Finance Bank (down 6.5%), ICICI Bank, Bharti Airtel, Federal Bank, and Infosys (down 3%) also acquired 100 to even 10,000 shares, sometimes across more than two transactions.

Exchange data also showed that key management personnel, known as KMP, of some firms bought shares in their firms. These include Jindal Steel & Power, Rathi Bars, Vaibhav Global, Hester Bio, Anuh Pharma, and Toyam Industries (down 12%). KMP buyers like MD, chairman, CFO and board director acquired shares in this period.