Indian Equity Markets Correct After Record Highs – Promoters Show Confidence Amid Downturn
The Indian equity markets have been undergoing a significant correction after hitting record highs in September 2024. The NSE NIFTY50 index has declined by 13% from its all-time high of 26,277.35, while the BSE SENSEX has fallen by 12% from its peak of 85,978.25 (reached on September 27, 2024). This downturn has been driven by intense selling by foreign institutional investors (FIIs), weak December-quarter earnings, and the looming threat of trade tariffs imposed by US President Donald Trump.
Amid the market turmoil, promoters of several companies have increased their stakes, signaling confidence in their businesses. Data from Ace Equity reveals that promoters of 20 companies in the BSE 500 basket raised their stakes in the December 2024 quarter. This report highlights the key companies where promoters have increased their holdings and analyzes the broader market trends.
Market Correction: Key Drivers
1. FII Selling Pressure
– Foreign institutional investors have been net sellers in Indian equities, driven by global macroeconomic uncertainties and rising US bond yields.
– The threat of trade tariffs by the US has further dampened investor sentiment, leading to capital outflows from emerging markets like India.
2. Weak Q3FY25 Earnings
– Several companies reported disappointing earnings for the December 2024 quarter, reflecting margin pressures due to rising input costs and subdued demand.
– Sectors like metals, IT, and financials were particularly impacted, contributing to the broader market decline.
3. Global Macroeconomic Concerns
– Rising inflation, geopolitical tensions, and slowing global growth have weighed on investor confidence.
– The US Federal Reserve’s hawkish stance on interest rates has also added to the market volatility.
Promoters Show Confidence: Key Companies
Despite the market downturn, promoters of several companies have increased their stakes, reflecting their belief in the long-term growth prospects of their businesses. Below is a list of select companies where promoters raised their stakes in Q3FY25:
| Company | Stake in Q3FY25 | Stake in Q2FY25 | Key Highlights |
|—————————|———————|———————|———————————————————————————–|
| JSW Steel | 44.85% | 44.84% | Net profit dropped 71% YoY to ₹719 crore in Q3FY25. |
| Poonawalla Fincorp | 62.36% | 61.87% | Net profit declined 93% YoY to ₹18.73 crore in Q3FY25. |
| Vardhman Textiles | 64.21% | 64.19% | Net profit rose 26% YoY to ₹203.56 crore in Q3FY25. |
| UPL | 33.51% | 32.52% | Turned profitable with a net profit of ₹828 crore vs. a loss of ₹1,217 crore YoY. |
| The Ramco Cements | 42.75% | 42.29% | Net profit more than doubled to ₹182.38 crore in Q3FY25. |
| Sheela Foam | 65.70% | 65.48% | Net profit declined 40% YoY to ₹18.59 crore in Q3FY25. |
| Alkyl Amines | 72.00% | 71.96% | Net profit rose 31% YoY to ₹44 crore in Q3FY25. |
| NCC | 22.02% | 22.00% | Net profit declined 13% YoY to ₹185 crore in Q3FY25. |
| Laurus Labs | 27.60% | 27.18% | Net profit jumped nearly 300% YoY to ₹92.30 crore in Q3FY25. |
| Himadri Speciality Chemical | 51.56% | 50.78% | Net profit rose 32% YoY to ₹142 crore in Q3FY25. |
| JSW Infrastructure | 85.62% | 85.61% | Net profit remained flat at ₹93 crore in Q3FY25. |
Analysis and Outlook
1. Promoter Confidence as a Positive Signal
– The increase in promoter stakes is a strong signal of confidence in the long-term growth potential of these companies.
– Promoters are likely betting on a recovery in earnings and improved market conditions in the coming quarters.
2. Sectoral Performance
– Metals and Chemicals: Companies like JSW Steel and Alkyl Amines have shown resilience despite margin pressures.
– Pharmaceuticals: Laurus Labs’ strong earnings growth highlights the sector’s potential.
– Infrastructure and Cement: NCC and The Ramco Cements are well-positioned to benefit from the government’s infrastructure push.
3. Market Recovery Prospects
– The Indian equity markets are expected to stabilize as valuations become more attractive.
– A revival in FII inflows, coupled with strong domestic demand, could drive a market recovery in the second half of 2025.
The Indian equity markets are currently navigating a challenging phase, driven by global macroeconomic headwinds and weak earnings. However, the increase in promoter stakes in select companies underscores their confidence in the long-term growth story of India Inc. Investors should focus on fundamentally strong companies with robust earnings potential and avoid over-leveraged or cyclical stocks in the near term.
While the market may remain volatile in the short term, the long-term outlook for Indian equities remains positive, supported by strong domestic demand, government reforms, and improving global conditions.
*Disclaimer: This report is for informational purposes only and should not be construed as investment advice. Investors are advised to conduct their own research or consult a financial advisor before making investment decisions.