Over the past few months, the Indian stock market has frequently witnessed large stake sell-offs by promoters and private equity firms, often right at the Opening Bell—triggering sharp price movements in the affected stocks.
The scale of these sell-offs surged significantly in May and June, following a sharp rerating of the Indian market. Insider and promoter selling reached $11 billion in just the past month, bringing the total to $30 billion in the first half of the calendar year.
Such stake sales by promoters are generally viewed as a red flag by investors as it signals lack of confidence in the company’s future prospects by those who know the best.
Meanwhile, this selling has coincided with FPI outflows of $11 billion in the same period. Yet, the Indian stock market has turned positive for the year, delivering 7% year-to-date (YTD) gains. The main reason: Retailer investors have absorbed this selling as signaled by a $41 billion DII buying, defying concerns like geopolitical risks and global economic policies.
“The price-agnostic inflows from retail households into domestic equity mutual funds have resulted in continued buying by DIIs, even as FPIs have been ‘negative’. Retail investment appears to have improved recently, as can be seen from (1) ‘direct’ retail investors turning net buyers in June, after being sellers over March-May 2025 and (2) likely increase in inflows into equity-oriented mutual funds in June after a downturn in recent months,” said Kotak Institutional Equities.
Major promoter and PE stake sales
Large exits were seen in Bharti Airtel, Bajaj Finance, Hindustan Zinc, IndiGo and V-Mart Retail over the past two months. Also, insiders such as BAT in ITC ($1.5 bn) or non-strategic investors such as Reliance Industries in Asian Paints ($1.1 bn) also sold their stakes.
KIE believes that insiders and promoters may have several reasons — business strategy, group and promoter debt — for selling stakes. India’s revived IPO market is showing a similar trend.
The value of fresh capital raised via IPO is significantly lower than stakes sold via OFS. According to KIE estimates, in H1CY25, fresh capital raised was $2,191 million by companies in the primary market while promoter or investor selloff via OFS was $3081 million.
“Many stocks are sold when the IPO lock-in period ends. The PEs have a fund life. They raise funds and invest them during the first 2-3 years of a fund’s life and then nurture or hold the investments for a 3-5 years and then exit them post that over the last couple of years of the fund’s life. They have to return money to their LPs. That is one reason why PEs sell. Promoters, typically, would sell when their stock is overvalued,” said Vikas Gupta, CEO & Chief Investment Strategist – OmniScience Capital.
Should retail investors worry about promoter selling?
While such large-scale exits can raise concerns among retail investors, it’s important to recognise the underlying drivers behind this trend, according to experts who don’t believe the latest spate of promoter selling should be seen as a sign of distress in the market.
“Most of these sales are not signs of distress but rather represent strategic lifecycle exits. PE firms are nearing the end of their investment cycles and are monetizing positions taken 5–7 years ago. Promoters, too, are capitalising on elevated market valuations to diversify personal holdings, repay debt, or fund new ventures. Moreover, India has historically had a low free-float in several sectors, and such dilutions are helping normalise float levels, thereby improving liquidity and price discovery in the market,” said Vinit Bolinjkar, Head of Research, Ventura.
He added that domestic institutional investors, especially mutual funds (MFs), have stepped in aggressively. “In June 2025, MFs deployed close to ₹28,000 crore, counterbalancing the supply created by promoter exits. Over the past quarter, mutual fund purchases through block deals have roughly matched the $4 billion offloaded by promoters, indicating strong institutional conviction in Indian equities,” said Boljinkar.
As per experts 30–40% of the capital raised by promoters is being reinvested in the market, fueling a healthy cycle of capital recycling.
Prashant Tapse, Senior VP- Research, Mehta Equities said that we believe that this is not signalling any weakness in the Indian stock market; rather this phase reflects a maturing market structure, where large investors are rebalancing their positions based on valuation dynamics while still believing in India’s macro and corporate fundamentals.
Boljinkar advised retail investors to continue with their SIPs, focusing on long-term goals, and avoiding reacting emotionally to headlines that may not reflect the underlying fundamentals.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
