Despite the improvement in sentiment and market conditions, share pledging by promoters continues to remain high. The total value of pledged stocks stood at $23.3 billion at the end of December, a 15% quarter-onquarter (q-o-q ) increase. In rupee terms, the total pledged value stood at 1.44 lakh crore, up 14% q-o-q .
The share of pledging in market capitalization (m-cap ) increased from 1.98% at the end of September to 2.04% in December. Out of the 763 companies that have reported pledging, promoters of 273 companies have pledged more than 50% of their holdings.
Consumer staples and energy firms saw the biggest decline in pledging of shares, while consumer discretionary and utilities firms witnessed the most increase during the quarter. Consumer discretionary, followed by energy, had the biggest pledging by promoters in value as well the most widespread promoter pledging.
The value of the shares pledged stood at $4.94 billion and $4.1 billion respectively in these sectors at the end of December , data compiled by Capitaline and Morgan Stanley Research showed. "There has been an increase in share pledging in sectors which are seeing stress," says Rikesh Parikh, vice-president, equities, Motilal Oswal Securities. Share pledging as a percentage of promoters' holdings was the highest for energy and the lowest for information technology (IT) companies.
Promoters have been pledging a good part of their holdings to raise money amid tough market conditions and high borrowing costs. "The borrowing cost is still high. Promoters are pledging shares to raise money in the shortterm ," says Alex Mathews, head, research, Geojit BNP Paribas Financial Services.
The value of pledged shares hit a peak of about $40 billion at the end of September 2010. But pledging of shares, which stood at $27.2 billion at the end of December 2012, has been on a steady decline over the last one year due to improved market sentiments and revocation of pledges. Certain sectors such as utilities have higher promoter pledging due to collateral requirements.
While 116 companies reported lower pledging compared to the previous quarter, 85 companies saw an increase in pledging. It remained at the same level in 527 companies. Promoters in as many as 34 companies have pledged their entire holdings with lenders. In all, eight promoters have increased their pledging by more than 25% in October-December . But 12 promoters managed to bring down their pledging by 25% or more for the period.
Cairn India topped the list of companies with the highest pledging in value terms. The company has pledged shares worth $3.87 billion. Cairn has pledged 66% of promoter holdings with lenders. United Breweries, JSW Steel, GMR Infrastructure, JP Power Ventures and Unitech were among the companies that had the highest promoter pledges, both in value and percentage terms.
The share of pledging in market capitalization (m-cap ) increased from 1.98% at the end of September to 2.04% in December. Out of the 763 companies that have reported pledging, promoters of 273 companies have pledged more than 50% of their holdings.
Consumer staples and energy firms saw the biggest decline in pledging of shares, while consumer discretionary and utilities firms witnessed the most increase during the quarter. Consumer discretionary, followed by energy, had the biggest pledging by promoters in value as well the most widespread promoter pledging.
The value of the shares pledged stood at $4.94 billion and $4.1 billion respectively in these sectors at the end of December , data compiled by Capitaline and Morgan Stanley Research showed. "There has been an increase in share pledging in sectors which are seeing stress," says Rikesh Parikh, vice-president, equities, Motilal Oswal Securities. Share pledging as a percentage of promoters' holdings was the highest for energy and the lowest for information technology (IT) companies.
Promoters have been pledging a good part of their holdings to raise money amid tough market conditions and high borrowing costs. "The borrowing cost is still high. Promoters are pledging shares to raise money in the shortterm ," says Alex Mathews, head, research, Geojit BNP Paribas Financial Services.
The value of pledged shares hit a peak of about $40 billion at the end of September 2010. But pledging of shares, which stood at $27.2 billion at the end of December 2012, has been on a steady decline over the last one year due to improved market sentiments and revocation of pledges. Certain sectors such as utilities have higher promoter pledging due to collateral requirements.
While 116 companies reported lower pledging compared to the previous quarter, 85 companies saw an increase in pledging. It remained at the same level in 527 companies. Promoters in as many as 34 companies have pledged their entire holdings with lenders. In all, eight promoters have increased their pledging by more than 25% in October-December . But 12 promoters managed to bring down their pledging by 25% or more for the period.
Cairn India topped the list of companies with the highest pledging in value terms. The company has pledged shares worth $3.87 billion. Cairn has pledged 66% of promoter holdings with lenders. United Breweries, JSW Steel, GMR Infrastructure, JP Power Ventures and Unitech were among the companies that had the highest promoter pledges, both in value and percentage terms.