Even as domestic investors heavily pour money into equities, the demand from them has been outstripped by supply as premium valuations entice a number of private companies to list and promoters to divest stake, said Ashish Gupta, chief investment officer of Axis Asset Management.
Stake sales across 20 companies by promoters aggregated Rs 40,000 crore in May and outstripped the inflow into the domestic mutual funds, which was at Rs 39,100 crore, Gupta said in a note.
Highlighting that this was not a one-off trend, Gupta said secondary market sales by promoters and of private equity stakes since April 2022 were Rs 4.42 trillion, compared to gross SIP flows of Rs 3.96 trillion and overall net inflow of Rs 5.02 trillion into mutual funds.
“The pace of equity supply appears unlikely to slow down. The IPO pipeline over the next few months is larger at Rs 93,000 crore. Private equity selling is likely to accelerate.
“These funds currently hold Rs 2.77 trillion worth of stakes in listed companies, and of these, over Rs 2.17 trillion are of more than three-year vintage and therefore should be offered in the market sooner rather than later,” he said.