Pledging of shares by promoters was at 7-year high in June by increasing to 16 per cent against 15.57 per cent in the same month a year ago, according to Pranav Haldea, managing director of Prime Database. In value terms, the figures jumped to Rs 1.98 lakh crore, up 11.86 per cent, as on June 30, 2016 against Rs 1.77 lakh crore in June 2015. According to Haldea, the rise in pledged shared can be attributed to the rise in share prices. As a percentage of total market capitalisation too, it went up from 8.39 per cent a year back to 8.51 per cent.
Shares of as many as 509 companies out of 1,517 NSE-listed companies were pledged as on June 30, 2016. The figure was at 496 in the same month last year.
Out of 509, there are 31 companies in which the complete holding of promoters were under pledge. The list includes the name of companies such as Visa Steel, Venus Remedies, Tantia Constructions, AGC Networks, Arshiya, Bajaj Hindusthan Sugar, Bharati Defence & Infrastructure, Consolidated Construction Consortium, Diamond Power Infrastructure, DQ Entertainment (International), Eastern Silk Industries, JMT Auto, IVRCL, etc. According to Haldea, high pledge levels are typically not considered a good sign by the investors as a downturn in the market price can lead to invocation and change in management.
According to Prime Database, there are 79 companies in which promoters have pledged over than 90 per cent of their stake, while there are 212 companies in which the promoters have pledged over 50 per cent of stake as on June 30, 2016.