Insider activity picks up as St rallies

The insiders have dusted off their demat accounts in the new year.

The net value of trades in listed companies by people including employees, promoters and those holding 5% or more worth of shares in them is the highest in at least a year and accompanies a rise of more than 13% in Indian equities since January.

The number of such announcements on insider trading has gone up, especially in February, according to ‘Color of Money’, JP Morgan’s India Equity Strategy report.

“Insiders were substantial sellers over the month. The trend was driven by a number of block deals,” said the report authored by Bharat Iyer, Bijay Kumar, Gunjan Prithyani from JP Morgan India and Adrian Mowat from JP Morgan Securities (Asia Pacific). Eight companies from Morgan Stanley Capital International’s India index, a benchmark for global equity investors putting their money into India, showed net buying while 16 saw net insider selling last month.

The net insider transaction value is close to Rs3,000 crore, the highest since at least March 2011, according to statistics from the report.

Companies which saw insider buying include Jindal Steel and Power, ITC, Shriram Transport Finance, Tata Motors, and Axis Bank.

The sellers list includes ICICI Bank, Kotak Mahindra Bank, HCL Technologies and United Spirits.

The selling is largely limited to employees, according to Ambareesh Baliga, chief operating officer at Way2Wealth Brokers. “It would have been more of an opportunistic selling by employees who would have got shares under ESOPs as the markets had seen decent up move after a long time. The promoters haven’t sold much as such,” he said.

In the case of HDFC Bank, the stock exchange data shows that the banks’ employees like Nirav Shah, Harish Shetty and Biju Pillai sold 100,000 shares, 32,000 shares and 16,000 shares, respectively, during February.

The Shiv Nadar Foundation has sold 237,306 shares in HCL Technologies during Feb 21-22. Tata AIG Life Insurance Company sold 500,000 shares in of Titan Industries between Feb 17 and 20. M Ravvichandran, vice president investment strategy at Unifi Capital, which has evolved strategies based on cues from insider activity, stated that the recent activity could very well mark the turn of the market cycle.

“Insider activity tends to pick up at the bottom of the market and at its peak. Looking at where the market has been before the rally, we believe this could mark a trough,” he said. Going forward, markets are likely to hold on to these levels as there is no major trigger in near term. The quarterly results in April would decide the stock specific moves in the coming month, said Baliga