An Investor has to be observant in cases where the promoter pledge is more than 50% and if the pledge proportion crosses the 75% threshold over a period of time then it is essential to be extra vigilant and cautious.
As per the latest pledged shares data released by the BSE, there are a large number of companies where promoters have pledged shares in varying proportions. The total value of pledged shares is Rs 2,28,100 crore—surely a sizable value. At least that is enough to create panic in the market when financers start selling.
Adding to the woes, in the case of 45 companies, 100 percent of the promoter holding is pledged. In the case of 225 companies, more than 70 percent of the promoter stake is pledged, whereas in 332 companies more than 50 percent of the promoter stake is pledged. Normally, 50 percent is considered to be the warning signal for investors to be observant.
Here is a quick checklist:
The Article has been authored by Mr. Mayuresh Joshi, Portfolio Manager, Angel One & it appeared on 18th March 2019 12:25 pm, on the following website -www.moneycontrol.com
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