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Short Call | Promoters selling back, rates crawling up, SBI contrarian, RBL Bank, shareholder’s Spiderman suggestion

The odds are heavily in favour of the NDA returning to power though views vary on the margin of victory. To that extent, the market already appears to be pricing in political stability and continuity of the existing policies

September 04, 2023 / 16:23 IST
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Both Sensex and Nifty shed nearly 1.5 percent each in August.

“History has shown over and over, that bull markets can go well beyond rational valuation levels as long as outlook for future earnings is positive.” - Peter Bernstein

After a brief lull, the sale of shares by promoters has resumed with vigour. Over a billion dollars worth of stock have been offloaded since the window for insider sales reopened for companies that have reported their earnings. The Street is divided on this trend. The arguments for and against insider selling remains the same. Veterans say that promoter selling is not as reliable an indicator of the stock being overvalued as much as promoter buying is an indicator of the shares being undervalued.

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Besides, the supply of shares has been absorbed without a hiccup, pointing to strong appetite among investors — both institutional and retail. There is merit in this argument. But what about the fact that so many promoters have been selling their shares at the same time.

One theory doing the round is that promoters are aware that their shares are no longer cheap after the recent run-up. Also, they feel the market could