Key Highlights

• Promoters, PE & VC investors have sold over ₹40,000 crore in June, raising valuation concerns.
• Despite heavy selling, domestic institutional investors have purchased ₹49,000 crore, stabilizing market sentiment.

Raising concerns about stretched valuations and supply overhangs in a soaring market, promoters, private equity, and venture capital investors have sold more than Rs 40,000 crore in June alone, as they continue to dump stakes at a rapid pace.

Driven by daily large block and bulk deals, the massive selling spree is poised to outperform last month's Rs 43,000 crore total, with heavyweight transactions dominating the scene. According to Prime Database and NSE, Vishal Mega Mart's promoter sold a 19.6% stake to mutual funds in a Rs 10,220 crore bulk deal on Tuesday, while Bajaj Finserv's promoter offloaded approximately Rs 5,500 crore in shares earlier this month.

Some of the market's most well-known names are among those selling in droves. Walmart-owned Flipkart divested its entire 6% stake in Aditya Birla Fashion & Retail (ABFRL) in a Rs 588 crore bulk deal, while Reliance Industries' Rs 9,580 crore stake sale in Asian Paints contributed significantly to the two-week total.

Other companies selling promoter stakes include Alkem Laboratories, Jubilant Foodworks, Azad Engineering, Suzlon Energy, and Kaynes Technology India.

In the first two weeks of June, promoters sold Rs 23,820 crore, while PE/VC divestments totaled Rs 8,500 crore. If you add RIL's stake sale of Rs 9,580 crore, the total comes to Rs 41,900 crore.

Capital migration pattern emerges

"Where is this capital going? The evidence points to real estate and alternative investments such as Portfolio Management Services (PMS) and Category II/III Alternative Investment Funds (AIFs)," Akshay Badjate, Fund Manager at Merisis PMS, said.

According to SEBI data, Category II AIFs, which include real estate and private equity funds, managed ₹13.58 lakh crore in March 2025, up from ₹9.54 lakh crore in September 2023, representing a 42% increase. By March 2025, Category III AIFs focused on listed equities and derivatives will be worth ₹2.3 trillion, up 58% from the previous year.

"Over the last two years (June 2023-June 2025), insider selling has coincided with ₹5.5 lakh crore in combined Category II/III AIF and PMS inflows, with real estate absorbing nearly ₹74,000 crore by December 2024," according to Badjate.

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Market Resilience Despite the Supply Overhang

Despite the selling pressure, domestic institutional investors have provided critical support. DIIs purchased over ₹49,000 crore in June, while foreign institutional investors sold nearly ₹7,000 crore worth of equities.

"While increased supply from promoter and PE/VC selling does create a supply overhang, significant domestic inflows, particularly from mutual funds, insurance companies, and pension funds, have so far cushioned the market and prevented a sharp correction. However, rising supply may limit upside potential in the near term, particularly if global volatility persists or domestic flows begin to slow," says Mayank Jain, Market Analyst at Share.Market.

Strategic Exit, Not Panic Selling

Sunny Agrawal, DVP and Fundamental Research Analyst at SBI Securities, believes that promoter selling isn't always a red flag because many PE funds are required to return money to their investors and have a limited time frame in which they can remain invested. As a result, they are bound to make a profit at the appropriate time, he stated.

"In terms of promoter selling, they often sell equity in the company to meet personal needs, so it is not always a red flag. As a result, inferences can vary case by case," Agrawal adds.

Valuation Concerns Mount

However, concerns about stretched valuations continue."The heavy insider selling is not a definitive signal of a market peak, but it does highlight legitimate concerns about current unsustainable valuations, particularly in several pockets of the small- and mid-cap segments," warns Badjate.

The Nifty Midcap 150 fell 1.5% in June, indicating selective pressure on broader market segments.

"Promoters/PE are selling a few stocks, and in those companies, upside can be limited in the short term because most institutional demand has been met," says Agrawal.

"From an overall equity market perspective, the cap on upside is likely to be limited, as the market has narrowed and investors are chasing select companies with strong earnings growth prospects in the current uncertain business environment."