INSUBCONTINENT EXCLUSIVE:
Mumbai: Mid- and small-cap stocks face the risk of sharp declines in the event of another round of a selloff with promoters restrained by
the capital markets regulator from buying shares of their companies over the next three months.
The Securities and Exchange Board of India
listed companies to file fourth quarter and annual earnings by June 30, rather than May 31
This means the trading window will have to be closed for promoters and management from April 1 till 48 hours after declaration of quarterly
results.
Since March 1, many promoters have purchased shares of their companies amid slump, cushioning the fall in prices
Investors usually stay away from smaller companies in such times
Now with promoters or insiders unable to buy shares of their firms, the slide could be sharp, said analysts.
Some small-cap stocks such as
Unichem Laboratories, Advanced Enzyme, LT Foods, India Cements among others gained between March15 and March 31amid purchases by promoters
in the open market.
The steep fall in valuations has encouraged promoters to buy shares of their companies
Promoters of almost 350 firms, mainly mid and smaller ones, bought shares worth over Rs 3,500 crore in the last one month when foreign
institutional investors were continuously selling and lenders were invoking pledged shares.
The regulator last week had extended the
deadline to file fourth quarter results from May 31 to June 30, but did not relax the closure of trading window
Many promoters sought exemptions from extending trading restrictions this time due to Covid-19 lockdown, but Sebi shot down these
during March 15-31, bought 21.46 lakh shares of the company in this period
NCC shares fell 7% on Friday
Mindtree shares declined 9% between March 15th and 31st
Promoters acquired nine lakh shares of the company in the period
Indiabulls Housing shares were accumulated by its promoter Sameer Gehlaut, who recently bought 8.2 crore shares from the open
market.
Foreign portfolio investors sold shares worth Rs 59,000 crore in March while domestic institutional investors bought equities to the
tune of Rs 26,000 crore during this period.
Analysts said promoters could still buy shares if they comply with the regulatory requirements
