The Infosys scrip plunged on Monday after founder families sold nearly $1 billion worth of their stake in the company for “personal and philanthropic purposes” through multiple block deals in early trading hours.

After opening in red, the IT giant continued its downward move as traders learned of the block deals through which promoters liquidated close to 3.3 crore shares at a total sell value of R6,483.9 crore. The stock ended the session 4.9% at R1,968.8, near its intra-day low.

The 2.8% equity was sold at an average price of R1,988.87, a 4% discount to Friday’s close, by Deutshce Equities India, the sole manager of the deal. “…the shares were sold to institutional investors, both FIIs and domestic,” added the investment banking firm in a press release.

Exchange filings showed that shares were sold by families of NR Narayana Murthy, Nandan Nilekani, SD Shibulal and K Dinesh, four of the seven founding members of the second biggest IT exporter of India. The sale reduced the combined holding of the 10 family members, including the founders, from 8% to 5.1%. As of September 2014, promoters held 15.9% of the total outstanding share of Infosys.

In a television interview, Sanjay Sharma, MD & head, ECM, at Deutsche Equities, further clarified that the book was reasonably subscribed and FII participation was almost to the tune of 80% of the overall share supply. He also added that response was seen from both existing and new investors.

Indeed, the share sale could be the reason for the significant net buying figures of both FIIs and DIIs on Monday, on a day when the broader indices lost close to 1% with almost four of the five constituents having closed in red. As per provisional data on BSE, while FIIs purchased Indian equities worth R4,984.6 crore, DIIs were net buyers of R1,030.6 crore of shares.

As of the September quarter, LIC, Government of Singapore, Abudhabi Investment authority, Oppenheimer Developing Markets Fund, Venguard Emerging Market Stock Index Fund and ICICI Prudential Life Insurance company were some of the prominent shareholders of Infosys, that owned 1.5% or more in the IT major.

With the latest dilution, promoters have not only taken advantage of a sharp rally in the stock after the appointment of ex-SAP executive Vishal Sikka as CEO, but also reflected their desire to be reclassified as ‘shareholders” in the company.

In early November, Kotak Institutional Equities, in a strategy report on impending ETF rebalancing, noted that founders of Infosys are seeking appropriate regulatory guidance for reclassifying their shareholding in the company. “This development, if played out, may see Infosys’ free-float increase, thereby increasing its weight in the benchmark,” said KIE.

Monday’s market reaction notwithstanding, the Street is still likely to treat Infosys with a positive momentum, given the re-rating of the stock after Sikka’s appointment and better-than-expected September quarter numbers.

Even as the Street expect details of the organisation structure and the newly-laid strategy by Sikka, the rally in Infosys stock has narrowed the valuation gap it maintained with TCS to an eight-month low. Infosys currently trades at a one-year forward price-to-earnings multiple of 17.85.

TCS, on the other hand, commands a PE ratio of 21.45. However, a Section of the Street has started to view Infosys as an expensive counter.

Recently, Societe General and domestic brokers like Anand Rathi and Karvy Stock Broking downgraded the Infosys stock.

After an analyst meet, Citi said that while the new management’s road map for transformation is encouraging, execution remains the key as the Street awaits further details in April 2015. “With valuations at 18x FY16E, a lot of the positives appear priced in; maintain neutral,” added Citi in a note last week.

Infosys has corrected nearly 10% after touching a record high of R2,183.45 on November 28 this year even as the 1:1 bonus issue turned effective last week.