Promoter Status
Promoter is basically the owner of the company (the ones who started it and the management team) Now when we are analysing a company it is also very important to analyse the promoter holding.
See the promoters of the company know best that how their company is performing. They are managing the company and any activities by them can tell us a lot what is going to happen in future.
A) Promoters Buying shares: When promoters are buying shares from open market this is a very positive sign to the shareholders of the company. Promoters by buying shares are giving a signal that they expect the performance of the company to improve in future. Otherwise why would they buy?
B) Promoters selling shares: This means that the promoters are not optimistic or not positive about the future of the company. It is a bad sign 90 % of the times.
C) Promoters pledging shares: First we need to understand what pledge means. Pledging is like mortgaging your shares. To those who still did not understand then it is to keep" Shares as Girvi"
So you pledge the shares and recieve a certain % of money against them.
It is not necessary that pledging may be always negative. For example if the promoters clarify to the exchange that shares are pledged just for short term and they will again release the plegde then stock price may not fall.
But if there is no clarification from side of promoters than it can be treated as negative sign.
D) Releasing pledge shares: When promoters release their shares from pledge then it is a very very positive sign. We can also call it UNPLEDGING of shares.
Just like a company plublishes its quarterly results it also plublishes something called as the Share Holding Pattern( SHP) every quarter (3 months).
Now you can find the SHP of every company on the BSE site.
The SHP of last few quarters can be read and understood that if promoters are increasing their stake or decreasing.
Written by - Yash
Edited by - #Raj
Raj Vora. Raj is studying BBA currently and is very passionate to learn different aspects of Stock Markets. He prefer to tag all his post as #ow.
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