Listed companies where promoters’ pledging of shares has gone up in the last one year significantly.

A rising stock market motivates many promoters to pledge their shares as they can secure higher amounts from lenders. While share pledging is normal the problem comes when the Stock price of the company whose shares have been pledged declines.

In such a situation, the promoter needs to offer more shares for pledging. This is viewed negatively and can cause the stock price to further tumble. if the promoter defaults on the loan, his pledged shares could be sold by the lender in the open market.Where the promoters have heavily pledged their shares and the business prospects are also weak.