Value of pledged shares rises 14% q-o-q in Q3

Written by fe Bureau | Mumbai | Updated: Feb 27 2014, 09:23am hrs
The value of pledged shares rose 14% sequentially to R1.44 lakh crore as on quarter ended December 31, 2013. In dollar terms, total pledged share stood at $23 billion, up 15% from the previous quarter, as per Morgan Stanley research. Assuming a 50% margin, the bank credit to these promoters at $11 billion was 1.18% of outstanding bank credit.

Among Sensex constituents, seven companies have reported aggregate pledges worth $2 billion. Overall, 763 companies disclosed pledges on their holdings during the quarter. Of the total, promoters of 273 companies have pledged more than 50% of their holdings.

On the other hand, 116 companies reported lower pledging versus the previous quarter, while 85 companies noted increased pledging.

Consumer staples and energy saw the biggest decline in the share of pledging, while consumer discretionary and utilities witnessed the most increase. Consumer discretionary, followed by energy, had the biggest pledging by promoters in value as well the most widespread promoter pledging.

Separately, as a percentage of market cap, pledging was highest for energy and utilities, while, as a percentage of promoter holding, it was the highest for energy and the lowest for technology.

Morgan Stanley noted that sectors like utilities have higher promoter pledging due collateral requirements. As per a Sebi directive in March 2009, promoters and founders of companies are required to disclose the amount of stock they have pledged.