This is because the promoter to a company is like the father to a daughter.
A company is an artificial person created by law and the person responsible for incorporating it is the promoter.
A promoter works so hard to get the company incorporated and he knows that once the company goes public, it won't be his company alone, in the similar way as the father knows that the daughter would leave him one day.
Having said that, if a shareholder sees the trust and vision of a promoter in the company he wants to invest in, he is in the same ship as the promoter is in.
A promoter generally holds a major portion of the company's capital and he put out his heart for the sake of his company. If a promoter is credible, so will be the company (not generalising). As like the father, like the daughter.
Say for that matter, if someone as charismatic and visionary as Narayan Murthy is the promoter of Infosys, then of course the shareholder would prima facie trust the vision of the promoter too.
To sum up, a promoter is the face of the company. In fact people misunderstand promoter as the sole owner of the company. When someone talks about RelianceIndustries Ltd, the first face which comes is of Mukesh Ambani. Similarly, for Reliance communication, it is Anil Ambani.
Hence, one would be interested to buy shares of Reliance industries rather than reliance communication just based on the track record of the promoters.
For the very same reason people who bought the shares of the company based on the trust of the promoter will start selling the same if the promoter starts selling as they will believe now that the promoter is himself questioning the company's performance.
A company is an artificial person created by law and the person responsible for incorporating it is the promoter.
A promoter works so hard to get the company incorporated and he knows that once the company goes public, it won't be his company alone, in the similar way as the father knows that the daughter would leave him one day.
Having said that, if a shareholder sees the trust and vision of a promoter in the company he wants to invest in, he is in the same ship as the promoter is in.
A promoter generally holds a major portion of the company's capital and he put out his heart for the sake of his company. If a promoter is credible, so will be the company (not generalising). As like the father, like the daughter.
Say for that matter, if someone as charismatic and visionary as Narayan Murthy is the promoter of Infosys, then of course the shareholder would prima facie trust the vision of the promoter too.
To sum up, a promoter is the face of the company. In fact people misunderstand promoter as the sole owner of the company. When someone talks about RelianceIndustries Ltd, the first face which comes is of Mukesh Ambani. Similarly, for Reliance communication, it is Anil Ambani.
Hence, one would be interested to buy shares of Reliance industries rather than reliance communication just based on the track record of the promoters.
For the very same reason people who bought the shares of the company based on the trust of the promoter will start selling the same if the promoter starts selling as they will believe now that the promoter is himself questioning the company's performance.
So what made the price decline?
Promoters are the person who initially started a company. Now if the real owners are selling their holdings, its create a environment that something going wrong with company.
The person who were managing company from the day it started are selling shares. So it may be possible that in future some thing will go wrong with company.
This mentality among traders make them sell share of that company which leads to decline in price.
You can check the promoter's details from
http://www.bseindia.com/