Insider sales hit a nine-month high in May as markets recovered and June will also be a month of high insider selling. The spike in sales betrays a likely lack of confidence in the current rally.
Stocks that have outperformed but seen large insider sales could face more downside potential if markets correct. Bharti, DLF, L&T, ITC, Kotak Bank, Shriram Transport, HDFC and HDFC Bank are among the companies that have seen relatively large insider selling in Apr-09 to Jun-09.
Insider selling in the region[Asia Pac] accelerated in May as market rally continued, hitting a record US$2.2bn (a 4x increase from April) – the highest since Sept-08. Even removing the big deals in May – the selling by promoters of DLF and Suzlon – the insider selling in May and Jun will be the highest in the last ten-months.