Pledging of shares by promoters in companies listed on NSE reached a 3-year high of 1.86 percent of the total market capitalisation of all companies listed on NSE as on 31st August 2020, according to primeinfobase.com, an initiative of PRIME Database Group. The last time it was this high was in April 2017 when promoters share pledging shot up to 1.88 percent.
In value terms, promoters’ share pledging increased by a huge 55.97 percent from last month with the value of pledged shares going up to Rs 2.77 lakh crore as on 31st August 2020 compared to Rs 1.78 lakh crore as on 31st July 2020, as per Prime Database' report.
Across all companies listed on NSE (including companies with no pledging), the percentage of promoter holding pledged as a percentage of total promoter holding though saw a marginal decrease, going down to 12.36 percent on August 31, 2020, from 12.43 percent as on July 31, 2020.
As of August 2020, promoters of 463 of the 1,656 main-board companies listed on NSE pledged their shares, as compared to 461 companies on July 31, 2020.
Surprisingly, there were as many as 29 companies in which the complete holding (100 percent) of the promoters was under pledge. These include names like Ankit Metal, Bajaj Hindustan, DQ Entertainment, Diamond Power, and Kwality, among others.
A high pledge is not considered a good sign by the investors as a downturn in the market price can lead to invocation and change in management.
Hindustan Zinc and Vedanta were the two companies where pledged shares of promoters went from zero percent to almost 100 percent in August on a month-on-month basis.
There were about 13 companies that saw promoters increasing their pledge in August compared to July. These include names like M&M, Adani Ports, and JSW Energy.There were 2 companies in which pledged shares were brought down to zero in August 2020 - Tirupati Forge (from 47.92) and Jyothy Labs (from 6.58), data showed.
Overall, there were 51 companies in which the percentage of promoter holding pledged decreased in August 2020 including Emami, JSW Steel, Max Financial Services, Ajanta Pharma, and GMR Infra, among others.
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