Markets

Value of pledged shares falls 22% at Sept-end

Our Bureau Mumbai | Updated on November 19, 2011 Published on November 18, 2011

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Consumer discretionary, materials cos see higher pledging



The value of pledged stock in the country has seen a significant drop of 22 per cent on a quarter-on-quarter basis.

At the end of the September quarter, the value of the pledged stocks was Rs 1.21 lakh crore, down from Rs. 1.55 lakh crore as at the end of the June quarter. According to a report by Morgan Stanley, around 772 companies had disclosed pledged data on their holdings.

The report notes that at 9.8 per cent, the pledged value as a percentage of the market cap of stocks of these companies and of India's market cap has fallen to its lowest level since March 2009. Assuming 50 per cent margin, the bank credit to these promoters at $12.3 billion is 1.3 per cent of outstanding bank credit.

Sector-wise the technology sector saw the highest fall in share of pledging, while that of the financial sector picked up during this quarter. As a per cent of total pledges (in value terms), consumer discretionary followed by materials had the biggest pledging by promoters.

As a per cent of market cap, pledging was highest for utilities and financials. The materials sector, followed by consumer discretionary, continues to have the most widespread pledging by promoters, said the report from Morgan Stanley.

Certain sectors such as utilities have higher promoter pledging due to the requirement of providing collateral security to banks and financial institutions for availing loans, the report said.

Of the 30 Sensex companies, 10 have pledged their shares totalling a cumulative value of Rs. 14, 880 crore.

Out of the 772 companies, 176 reported lower pledging, 169 increased their pledging and 379 companies maintained the same level of pledging as the previous quarter.

Among the remaining 48 companies, the level of pledging has increased or decreased dramatically.

Published on November 18, 2011
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