What is a promoter pledge and why does it matter?

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.

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.