Promoters Holding Analysis - Most Common Mistakes (Hindi)

Promoters Holding Analysis can prove to be an asset to the investors if it is done properly. However, most of the times Promoters Holding Analysis is wrong as the investors select the stock only based on the single criterion i.e. increase in promoters holding in the company.

As a thumb rule if the FII and promoters are increasing their stake then it positive for the stock price. On the other hand, the reduction in shareholding is a negative news. It is not true always.

As an investor, you should understand the reason for increase or decrease in the promoters stake and secondly, the method of change in shareholding pattern. If the promoter is decreasing stake to issue ESOP or introduce strategic or financial partner or to reduce debt then it is a good news.

High promoters stake is not a good sign during shareholding pattern analysis. The reason being, it means the institutional investors are not interested in the stock. In case of high FII holding, the sudden sell of by the FII can crash the stock price.

It also important to check the pledging data. Sometimes promoters increase stake and pledge the shares at a higher price thus get benefited.

Besides shareholding pattern analysis, you should also check the business prospects of the company. Both should be clubbed together to complete the Promoters Holding Analysis.

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