What is a promoter pledge and why does it matter?

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I have seen news about promoter pledging shares as concerning. Why is high promoter pledge dangerous?

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Wolf Alpha

Trader · 15 days ago

Promoter pledging means they have taken loans against their own shares. If the stock price falls below a threshold, lenders sell pledged shares, causing further price decline — a death spiral.

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Market Hawk

Trader · 15 days ago

Treat high promoter pledge (above 30-40%) as a major red flag. It means the promoter needs cash urgently and has limited confidence in the business. Always check pledge % on BSE/NSE website.

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What is a promoter pledge and why does it matter?

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