Maran Govindasamy, founder of Unifi Capital, said that the ongoing wave of promoter selling in India’s markets is concentrated in sectors with high valuations — not in the “fair” or “cheap” segments — and this collective selling by promoters is one of the strongest indicators of overvaluation today.
In the exclusive Diwali Blockbuster edition of The Wealth Formula with N Mahalakshmi, he said, “Promoter selling can happen for a hundred reasons — family settlements, diversification, or liquidity needs. But collective promoter activity gives a great signal.”
As of the last financial year, promoters collectively held 53 percent of India’s $5.5 trillion market capitalization. This includes 11.5 percent held by the Government of India through PSUs, 9.5 percent by multinational corporations via their listed subsidiaries, and 32 percent by Indian private promoters.
Govindasamy explained that distinguishing between these categories is critical to interpreting the signal. “Ten years ago, the government was a willful seller, while MNCs were willful buyers. Over the last one to two years, we’ve seen MNCs begin to sell, the government attempting to but not successfully, and Indian private promoters increasingly turning net sellers,” he said.
Historically, Indian private promoters have been contrarian and opportunistic. “In March 2020, during the Covid crash, promoters were the biggest buyers — second only to their record buying during the 2008 global financial crisis,” he said. “When the world was in paralysis and indices fell 60 percent in ten months, promoters bought because they viewed those businesses as value, not portfolio trades.”
That conviction, he noted, has flipped. “Now we’re seeing both MNC and Indian promoter selling gather momentum — but not across all segments. You won’t see promoter selling in IT, for example. There are companies where promoters hold 60–70 percent and haven’t sold, even though those stakes are worth billions,” Govindasamy said.
“Promoter selling is a function of their assessment of future earnings and valuations. And right now, dilution is visible only in the richly valued parts of the market.”
According to him, promoters, not foreign investors, are now the largest sellers. “This is an important signal — because this selling is concentrated in expensive sectors. Domestic liquidity cannot match that supply.”
Govindasamy backed this view with ownership data: promoters at 53 percent, FIIs at 16 percent, mutual funds at 10 percent, domestic institutions (LIC, PF, EPFO, AIFs) at 7 percent, and the remaining 13 percent comprising portfolio managers, HNIs, family offices, NRIs, and retail investors. “This 13 percent category is the real incremental buyer — directly or through mutual funds. The question is, who’s meeting their demand? It’s the promoters,” he said.
The flurry of new listings — 11 IPOs in a single day recently — is another indicator of frothy valuations. “That’s not a sign of undervaluation,” he said. “Over 70 percent of IPOs in the last year have been offers for sale, where money simply moves from one shareholder to another. That capital need not come back.”
Govindasamy cautioned investors against reading too much into individual promoter exits. “A single company’s promoter selling doesn’t predict its stock’s future performance — there are good and bad examples. But collective promoter selling is a far more reliable signal of market-level overvaluation,” he said.
On IPO participation, he said Unifi tends to enter selectively and tactically. “We may buy some IPOs as trades, not long-term investments. It’s not that all IPOs are bad — some promoters may have genuine reasons to list — but the exceptions are few. In general, if someone skips all IPOs, they might miss a few opportunities but will save themselves a lot of pain in the future,” he said.
According to Maran Govindasamy, the most telling signal of market froth today isn’t foreign outflows or macro risks — it’s promoters cashing out in overvalued sectors.
Promoters, he said, “sell when valuations are rich and buy when markets panic — and that’s the pattern investors should be paying attention to.”
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