"How much supply of paper is there?" Kotak Institutional Equities' Sanjeev Prasad begins his latest note with this question.

The answer to this lies in two parts: One, the valuations, and two, strategies from majority shareholders, Prasad wrote in his note.

India has had a record breaking year in terms of IPOs, as well as exits / stake sales by promoters and PE/VC funds.

"The continued large supply of paper in India in the primary and secondary markets from private equity entities and promoters simply reflects high valuations across most sectors and stocks," Kotak's Prasad wrote in the note, adding that the supply of paper will remain at elevated levels due to two important factors.

One of the factors is as long as valuations remain high, which incentivizes promoters to monetise a part

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