Equity sales worth $2 bn in next 14 trading days: BNP Paribas

'Free Float - Near Term Hiccup For Some' noted that stock prices of some companies likely to come under pressure

The next 14 trading days will see two billion dollars or nearly  Rs 11,000 crore of share-sales hitting the market in a bid to meet a June deadline on minimum public shareholding.

A BNP Paribas report entitled, ‘Free Float – Near Term Hiccup For Some’ noted that the stock prices of some of these companies are likely to come under pressure.

“This guideline has created an asymmetrical situation between sellers of equity (ie company promoters) and potential buyers (secondary market investors). The promoters have to sell by a certain date, but the buyers are not forced to buy….This, in our view, creates downside risk to the share prices of companies that need to increase freefloat,” it said in a report dated 15th May and authored by Manishi Raychaudhuri and Gautam Mehta.

Not all of these companies will go in for share sales suggested the report.  

“…it is a significant quantum to be completed in a 14 trading day period. However, not all companies will opt for selling equity in the market through OFSs or other routes. Some may shift promoter group shareholdings to independent trusts, like Wipro did,” said the report.

Interestingly, 80% of the amount to be raised is from the 15 largest companies by market capitalization. They include MMTC, Oracle Financial, Gilette India and Adani Ports.