Promoter-pledging declines in May

Promoters of 3,007 companies listed on their equity platform pledged their holding and the value of pledged holding was at Rs. 2,33,827.61 crore, as on Wednesday, June 13, 2018.

In a rising interest rate economy, usually, the promoters of listed companies pledge their shareholding with lenders as collateral for borrowing. This mode of access to capital allows promoters to retain ownership of their company. A company's promoter holding and the percentage of shares pledged by the promoter is a key indicator of the financial health of the company. Increased pledging by majority owner of the company may lead to volatility in the stock price.

In May 2018, of the 4,851 companies listed on BSE exchange, promoters of 3,005 companies had pledged their holding as compared to 3,142 companies in April 2018. The value of promoter's pledged shares was at Rs. 2,25,170 crore, as against Rs. 2,57,744 crore last month, showed data released by BSE.

Among these, 434 companies had promoters who pledged upto 30 per cent holding, compared to 448 companies in April, of these 57 companies belong to the BSE 500. Another 135 companies had promoters who pledged upto 50 per cent holding, compared to 152 companies last month, of these 13 companies belong to the BSE 500 group. The highest percentage of pledging in May, that is, 50 to 70 per cent was seen in 82 companies of, which 5 are among BSE 500 stocks.