Share pledging declines in September: Ambit

May point to marginal improvement in promoters' liquidity situation

The proportion of shares that promoters are pledging with lenders to meet cash requirements has declined in the three month periohd ending September to 4.2% of total outstanding shares, falling from 4.5% at the end of June.

The decline may point towards an improvement in their financial situation, according to an Ambit Capital report dated October 22, which also noted some changes in insider activity.

"The proportion of shareholdings pledged has declined, indicating improvement at the margin. Insider activity suggests increased buying in some pro-cyclical pockets, with safe-haven stocks seeing increased insider selling," said the 'Insider And Pledge Monthly' report authored by analysts Gaurav Mehta and Karan Khanna.

"The highlight of insider activity is the increased buying interest in stocks that have been underperformers over the last few years...Simultaneously, increased selling interest can be seen in pockets which have been immensely popular over the past three years such as Pharma, FMCG(Fast Moving Consumer Goods) and private sector banks," it added.

Sectors such as pharma and FMCG have been used as defensive themes to ride out the market volatility in recent years.

Promoters of companies have resorted to pledging their shares in the market in a bid to meet their liquidity constraints, leading to downward pressure on the shares of the companies.