Promoters of companies pledging at two-year low on market rally

In the December quarter, 132 listed firms reduced the percentage of pledged shares, with 12 bringing it down to zero

A rally in equities and a gradual improvement in the macroeconomy have led to a sharp decline in shares pledged by promoters of companies.

According to data compiled by Prime Database, the percentage of pledged shares across listed companies is 14 per cent, the lowest since March 2015. During the December quarter alone, the share of pledging went down by 75 basis points, thanks to a 9-per cent rally in the broader Sensex.

Generally, whenever share prices go up, pledge levels come down, as fewer shares will be required to meet the collateral amount. However, there are other factors, including