Pledged shares fall 7% in February; is stress in market on downward slope?

By: |
March 5, 2018 5:38 PM

A decline of 7 percent was witnessed in the shares pledged by the promoters of BSE-listed companies in the month of February.

Asian stocks, Nikkei, Asia-Pacific shares, Nasdaq A fall of 7 percent was observed in the shares pledged by the promoters of BSE-listed companies in the month of February.

A decline of 7 percent was witnessed in the shares pledged by the promoters of BSE-listed companies in the month of February. The value of pledged shares reached over Rs 2.54 lakh crore in the same month, PTI reported citing BSE data. During the end of January this year, value of pledged shares was Rs 2.72 lakh crore. It reached 3.03 lakh crore at the end of December. At the end of November it was Rs 2.78 lakh crore. In out of 5,054 BSE-listed companies, 3,062 companies saw pledging of shares by the company promoters till February this year, PTI reported citing BSE data. The shares are generally pledged by the companies to raise funds either for the same firm or to finance other projects.

A fall of 7 percent was observed in the shares pledged by the promoters of BSE-listed companies in the month of February likely indicates lowering of stress. High pledging levels are not considered as a good sign by investors as a downturn in the market price can lead to invocation and change in management.

Up to 30 percent of the respective holdings which stand at Rs 1.4 lakh crore were pledged by the promoters of 448 companies, according to the BSE data. In the month of February, 154 companies witnessed 30-50 percent of the promoters’ holding about Rs 47,115 crore being pledged in February.

In about 78 companies, 50-75 percent of the promoter-holding to the tune of Rs 31,149 crore was pledged. In addition, promoters of three firms pledged stake between 75 percent and 90 percent.

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