Why promoter’s pledged shares must be watched closely
As India celebrates a plethora of good news like low inflation, falling deficits and corporate profitability; there is a silent problem that is lurking in the shadows. Promoters pledging shares with financers to raise money for their business is nothing new. The problem arises in two basket cases. Firstly, when promoters have pledged almost their entire holdings with the financers! Secondly, when the pledged shares belong to a company that is susceptible to bouts of volatility! Unfortunately, both these cases are visible in abundance in India currently.