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As bulls reign, corporate czars sell stakes

The action by the captains of corporate India makes other investors wonder whether the markets have reached an expensive zone, at least for the time being.

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MUMBAI: Many top honchos of India Inc are selling part of their personal shareholdings in their companies, just as the stockmarkets are hitting historic highs. The signal: it’s time for partial profit booking.

The action by the captains  of corporate India makes other investors wonder whether the markets have reached an expensive zone, at least for the time being.

This comes at a time when the Indian markets, like others, are in the grip of a bull frenzy.

Among the notable sellers are Gagan Banga, a promoter-director of India Bulls. He sold 1,50,000 shares of the internet brokerage firm-cum-real estate developer through the market. He still holds 30,000 shares.

His shareholding in the company could, however, rise as he holds 7.2 lakh options, which can be converted into shares in the near future. Incidentally, the company had also announced a buyback of shares, to help inspire confidence in the investors.

The signs are there for everyone to see. There are more sellers than buyers among the top executives in the marketplace.

The Securities and Exchange Board of India (Sebi), the market regulator, has deemed that senior officials of listed companies should inform the stock exchanges of the share transactions whenever they take place.  Many of them are selling shares that they got through employee stock option schemes. And this latest trend of insiders selling shares is widespread — from information technology companies to segments as diverse as pharma and cement.

Senior officials and their close relatives of companies like Lupin Laboratories, Nicholas Piramal, ACC and Gujarat Ambuja were selling stocks intermittently and booking profits.

Last week, Nicholas Piramal India informed stock exchanges that Praneet Singh, a senior executive, bought and sold shares of the company. Singh had acquired 47,250 shares on December 7, 2005, and sold all of them the same day.

The mode of acquisition was through equity stock options (ESOP) and the sale was also through the ESOP route. The shareholding of Praneet Singh is ‘nil’ in Nicholas Piramal now.

“The above shares represent shares sold through the cashless exercise of ESOP, whereby the shares are directly sold by the ESOP Trust on behalf of the employee on vesting and exercise thereof,” Nicholas Piramal informed stock exchanges.

Mahindra & Mahindra Ltd, the leading utility vehicle and tractor manufacturer, said its executive director, Arun Kumar Nanda, sold 1,000 shares of M&M this month. Nanda, however, continues to hold 1.32 lakh shares in M&M, aggregating to 0.06% of the share capital of the company.

Crest Animation Studio, promoted by husband-wife duo of Shyam Ramanna and Seemha Ramanna, saw Seemha selling 3 lakh shares of the animation company, which recently tied up with a leading American animation company. Soon after the market sale, Seemha acquired 7,65,330 equity shares along with the other promoters of the company at Rs 52 a share, a huge discount to the ruling market price.

Seemha’s current holding in the company would increase from 4.40% to 8.18% of the paid-up capital, after the preferential allotment of the company.

Pramod Khera, promoter of Aptech, sold 10,000 shares, a few months after the company tied up funds with Indian private equity companies. Engineering firm Larsen & Toubro saw two senior officials on the board — V K Magapu and K Venkatramana — selling 5,000 and 8.239 shares, respectively. L&T shares are among the leading pivotals in the current bull run.

At Tata Motors, Noshir Soonawala, a very senior Tata Sons board member, has sold 4,280 shares and gifted 6,000 shares, and the company has informed the exchanges that Soonawala holds ‘nil’ shares in the company after the two transactions.

P D Narang, a director of Dabur India, sold 50,000 shares in the company. His colleague Sunil Duggal, too, sold some shares. Duggal acquired 2,000 shares of Dabur India Limited on November 30, 2005, and 1,000 shares on December 1, 2005, from the market and sold 9,000 shares within a week, on December 8, 2005, and 1,000 shares the next day.

At cement makers Gujarat Ambuja Cement and ACC, many among the top brass have been selling a portion of the shares held by them and booking profits.

At ITC, the company that announced a stock split and a bonus issue some months ago, a few senior officials sold a fraction of their holdings in the company, just when the cigarette maker with interests in hotel and paper saw its shares hit a historic high (ex-bonus).

Analysts say that the top brass would be selling even as they acquire more through generous stock options. Among the motives for the sale, apart from partial profit-booking would be some tax planning as the financial year-end is nearing.

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