Market price of pledged shares vital: Experts
Times of India, February 12, 2009, Page 21
Times of India, February 12, 2009, Page 21
Investors To Benefit More From This Added Disclosure
MUMBAI: Sebi's decision to force companies to disclose the quantum of shares pledged by promoters has come as an important step for investors who buy and sell stocks based on company fundamentals. However, market players feel another crucial information the price at which the pledged shares could be put up for sale in the market (trigger price) by lenders should also be disclosed since this could help investors take a better view of a stock. Post the Sebi directive, nearly 300 companies have disclosed the extent of shares pledged by their promoters. On Wednesday, over 30 companies disclosed the data to the bourses.
While disclosing the trigger price would not be of much use to investors in a bull market, it could come handy in a bear market like the present one, they said. Additionally, end use of funds raised by pledging of shares could also give investors some indications about a company's future.
"Of course Sebi has taken a welcome step by making promoters disclose the quantum of pledged shares. But it would also help investors to know more about the end use of funds received by pledging and also the trigger price at which the lenders could sell these shares,'' said Puneet Nanda, CIO, ICICI Prudential Life Insurance.
As of now companies disclose the quantum of shares pledged by promoters, percentage of promoters' holding pledged and also percentage of total equity capital pledged. "Disclosing the price at which shares were pledged and the trigger price will help investors take a better view of the stock,'' said Arun Kejriwal, director, KRIS, an investment research and advisory firm.
MUMBAI: Sebi's decision to force companies to disclose the quantum of shares pledged by promoters has come as an important step for investors who buy and sell stocks based on company fundamentals. However, market players feel another crucial information the price at which the pledged shares could be put up for sale in the market (trigger price) by lenders should also be disclosed since this could help investors take a better view of a stock. Post the Sebi directive, nearly 300 companies have disclosed the extent of shares pledged by their promoters. On Wednesday, over 30 companies disclosed the data to the bourses.
While disclosing the trigger price would not be of much use to investors in a bull market, it could come handy in a bear market like the present one, they said. Additionally, end use of funds raised by pledging of shares could also give investors some indications about a company's future.
"Of course Sebi has taken a welcome step by making promoters disclose the quantum of pledged shares. But it would also help investors to know more about the end use of funds received by pledging and also the trigger price at which the lenders could sell these shares,'' said Puneet Nanda, CIO, ICICI Prudential Life Insurance.
As of now companies disclose the quantum of shares pledged by promoters, percentage of promoters' holding pledged and also percentage of total equity capital pledged. "Disclosing the price at which shares were pledged and the trigger price will help investors take a better view of the stock,'' said Arun Kejriwal, director, KRIS, an investment research and advisory firm.
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