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The Hindu
5 days ago
- Business
- The Hindu
Tax, securities regulations make buybacks unattractive for shareholders
A combination of taxation and regulatory changes have led to Indian listed companies losing interest in buyback of shares. According to PrimeDatabase, there were only four share buy back offers, amounting to a total of ₹186 crore as of June 26, 2025 . Last calendar year, this amounted to 38 offers with a total value of over ₹8,000 crore. 'As the data show, buybacks have completely dried up ever since the taxation rule change as per which has shifted the burden from companies to shareholders with effect from October 1, 2024 to bring it on a par with dividends,' said Pranav Haldea, MD of Prime Database Group. 'Buybacks have been negligible despite the bearish market which we had from October till March, during which buybacks typically thrive,' he said. 'Companies who might have wanted to buyback shares may have already completed it in September 2024 after the Budget announcement,' Mr. Haldea added. 'Companies which were considering a buyback may have accelerated their plans to launch before the new taxation rules came into effect,' he said. The Union government had announced that with effect from October 2024, income from buyback of shares would be taxed on a par with income from dividend. Earlier, companies were paying a 20% buyback tax. If the income that shareholders receive is considered as dividend, then shareholders will have to pay capital gains. This, according to experts, may have made buybacks less attractive for shareholders and hence may not have led to such a demand even during a bear market. Besides the North Block regulation, the markets watchdog might have also contributed to the trend. 'The reduction is primarily a consequence of SEBI's regulatory changes. SEBI had been progressively reducing the option for companies to buy back their shares through the open market, and starting this FY, it has eliminated. Companies are now restricted to undertaking a buyback only through the tender offer route,' said Arindam Ghosh, partner at Khaitan & Co. Merchant bankers, who were earlier advising companies on buyback offers, may have now lost their stream of income. 'It is possible that merchant bankers previously active in share buyback deals are facing challenges, given the recent regulatory changes by SEBI phasing out the open market buyback route. They may need to shift their focus to other areas where they are mandatorily required to be involved as an intermediary,' Mr. Ghosh said.
Mint
24-06-2025
- Business
- Mint
Mutual funds turn out to be aggressive buyers via bulk and block deals: Report
Mutual funds are turning out to be aggressive buyers in the bulk and block deal space over the past three to four months, capitalising on discounted valuations and growing market volatility, reported Business Line. This strategic shift allows them to acquire large quantities of shares without triggering price distortions. Among the top 20 bulk and block deals so far this year, mutual funds have participated in four, with SBI MF, ICICI MF and HDFC MF leading the charge. An analysis of deals since January shows domestic funds accounted for 20 percent of the top transactions, primarily where promoters or private equity players were offloading stakes. SBI Mutual Fund invested ₹ 12,303 crore while ICICI MF pumped in ₹ 4,232 crore, followed by Kotak MF and Motilal Oswal at ₹ 2,578 crore and ₹ 2,156 crore respectively, according to Prime Database. That all the four fund houses restricted their investments to 10 deals shows their selective approach to entering these deals. Pranav Haldea, MD, Prime Database Group, said the steady rise in bulk and block deals points to sufficient liquidity in the hands of investors even as it boosts foreign investors' confidence in Indian markets in terms of ease of exit (and entry). Typically, large institutional investors find it convenient to take the block deal route as they can take a position in a stock at a known price without the fear of impact cost. The MF industry has been requesting SEBI to increase the cap on discount over the previous day's closing price that can be offered under block deals, said Haldea. Swapnil Aggarwal, Director, VSRK Capital, said MFs prefer bulk and block deals 'to strategically accumulate quality stocks with less volatility and better pricing control'. Anil Rego, Founder and Fund Manager, Right Horizons PMS, said block deals — executed during special trading windows at predetermined prices — help MFs avoid market volatility and price slippage when making large investments. Passive funds also stand to benefit as SEBI's proposed third block deal window during the closing auction session could help them reduce tracking errors, he said. For all personal finance updates, visit here
Entrepreneur
05-05-2025
- Business
- Entrepreneur
Indian Capital Market Reaches Milestone: DIIs Overtake FPIs in Ownership Share
Reportedly, DIIs, along with retail and High Net Worth Individuals(HNI) investors, have now been playing a more influential role with their share reaching an all-time high of 27.10 per cent as of March 31, 2025. Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Domestic institutional investors (DIIs) have overtaken foreign portfolio investors (FPIs) in ownership of companies listed on the National Stock Exchange (NSE) for the first time in 22 years, underscoring the rising interest of Indian investors in equities, according to PrimeInfobase. According to Pranav Haldea, Managing Director, PRIME Database Group, this is a landmark moment for the Indian capital market. "Indian markets shall continue their steadfast march towards even more 'atmanirbharta' in the quarters and years to follow, with the day not too far when the share of MFs alone shall overtake that of FIIs. For years, FIIs have been the largest non-promoter shareholder category in the Indian market, with their investment decisions having a huge bearing on the overall direction of the market. This is no longer the case," said Haldea. Reportedly, DIIs, along with retail and High Net Worth Individuals(HNI) investors, have now been playing a more influential role with their share reaching an all-time high of 27.10 per cent as of March 31, 2025. FIIs remain an important constituent, but their stranglehold on the Indian capital market has declined. According to Haldea, this completes a structural shift that has taken place in the Indian market over the decade. As of March 31, 2015, the FII share was 20.71 per cent, the combined share of DII, retail, and HNI stood at just 18.47 per cent. Amit Jain, co-founder of Ashika Global Family Office Services, said that after the pandemic, the Indian equity market has undergone a fundamental shift and the number of Demat accounts has surged from 3-4 crore to over 18 crore, reflecting a significant rise in retail investor participation. "Even if only 50 per cent of these accounts are active, it translates to around 9 crore investors. At a modest monthly investment of INR 10,000 per investor, this equates to over INR 9 lakh crore in annual inflows, with an additional INR 3 lakh crore coming through SIPs, bringing total domestic inflows to approximately INR 12 lakh crore per year," said Jain. Earlier, in October 2008, when foreign nationals sold INR 16,000 crore in equities, the market dropped by 25 per cent. "But now, even when they sold ₹87,000 crore in a single month this January, the Nifty barely moved, dropping only 2–3 per cent, showing how resilient we are, and that gives us confidence," added Jain. Reportedly, some of the recent FII buying appears to be driven by short covering or hedging, and the country is more likely to see DIIs holding a larger share until foreign investors decisively return, possible only when US 10-year Gsec yields fall to 3.5 per cent levels. According to the PrimeInfobase report, the share of retail and HNI investors decreased to 7.51 per cent and 1.98 per cent, respectively, as on March 31, 2025, from 7.70 per cent and 2.09 per cent as on December 31, 2024. As such, the combined retail and HNI share decreased to 9.49 per cent from 9.79 per cent during the quarter.
The Print
02-05-2025
- Business
- The Print
DIIs surpass FIIs in market ownership ending March Quarter, FIIs share drops to 12-yr low
The data highlighted that as of March 31, 2025, the share of DIIs in companies listed on NSE reached an all-time high of 17.62 per cent, up from 16.89 per cent at the end of December 2024. In comparison, FII share holdings dropped to a 12-year low of 17.22 per cent, down from 17.24 per cent in December 2024. New Delhi [India], April 2 (ANI): The Domestic Institutional Investors (DIIs) market ownership in terms of holdings in Indian equities has surpassed Foreign Institutional Investors (FIIs) for the first time, marking a significant shift, as per the data released by PRIME Database Group This milestone was driven by a massive net investment of Rs 1.89 lakh crore by DIIs in the March 2025 quarter. In contrast, FIIs pulled out Rs 1.16 lakh crore during the same period, with an outflow of Rs 1.29 lakh crore from the secondary market and a partial offset of Rs 13,107 crore inflow in the primary market, influenced by rising U.S. yields and a stronger dollar. The data also pointed out that among DIIs, mutual funds led the charge with a net investment of Rs 1.16 lakh crore, pushing their share to a record 10.35 per cent–marking the first time mutual fund holding has crossed into double digits. Insurance companies also contributed significantly, buying shares worth Rs 47,538 crore. Alternative Investment Funds (AIFs) and Portfolio Management Services (PMS) added Rs 3,885 crore and Rs 1,137 crore, respectively. However, banks were net sellers, offloading Rs 1,345 crore. In rupee terms, DII holding in the Indian markets now stands at Rs 71.76 lakh crore–2 per cent higher than that of FIIs. According to Haldea, this structural shift has taken place in the Indian market over the last 10 years. As on March 31, 2015, while the FII share was 20.71 per cent, the combined share of DII, retail, and HNI was just 18.47 per cent. This has brought the FII to DII ownership ratio below 1 for the first time, standing at 0.98. A decade ago, in March 2015, this ratio was 1.99, with DII share 10.32 percentage points lower than that of FIIs. PRIME Database Group Managing Director Pranav Haldea called this a 'landmark moment' for Indian markets. He said, 'The domestic Mutual Funds (MFs), flush with retail money coming through SIPs, have continued to play a huge role in this with a net investment of Rs 1.16 lakh crore during the quarter, taking their share in companies listed on NSE to yet another all-time high, and the first time in double digits, of 10.35 per cent as on March 31, 2025 (up from 9.93 per cent).' Sector-wise, both DIIs and FIIs increased their exposure to Financial Services, while reducing allocations to Information Technology and Consumer Discretionary sectors, respectively. Retail and HNI investors, however, saw a dip in their market share to 7.51 per cent and 1.98 per cent, respectively. Despite net buying Rs 19,766 crore during January and February, they booked profits in March, selling shares worth Rs 18,925 crore when markets rallied. Meanwhile, promoter share also declined slightly. Government promoter share fell marginally to 9.27 per cent from 9.29 per cent, while private promoters' share dropped to 40.81 per cent from 41.09 per cent, despite net buys worth Rs 393 crore and Rs 7,337 crore respectively. (ANI) This report is auto-generated from ANI news service. ThePrint holds no responsibility for its content.
