PosiStep 10: Who owns the company: promoters, FII, DII, pledging, bulk deals
In PosiStep 3 you met promoters, institutions and the public. This PosiStep goes further: who the big institutional investors are, why pledged promoter shares deserve attention, and what large trades called bulk and block deals reveal.
The shareholding pattern
Every quarter, Indian listed companies publish a shareholding pattern: the percentage of shares held by promoters, foreign institutions, domestic institutions and the public. Comparing quarters shows who is buying more and who is selling.
FII and DII: the big institutions
FII (foreign institutional investors, officially called FPIs) are investment funds and institutions from outside India. DII (domestic institutional investors) are Indian institutions: mutual funds, insurance companies such as LIC, banks and pension funds.
Institutions manage very large sums and usually research companies in depth, so their holdings are watched closely. Their buying or selling can move prices, but they also make mistakes and change their minds.
Promoter pledging
Sometimes promoters pledge their shares: they use them as security to borrow money. If the share price falls a lot, the lender may ask for more security or sell the pledged shares, which can push the price down further.
A high share of pledged promoter holding is a common warning sign, because it can mean the promoters need money and the share price is exposed to forced selling. Pledging is reported in the shareholding pattern.
Bulk deals and block deals
A bulk deal is when one investor buys or sells more than 0.5% of a company's shares in a single day; exchanges publish the details the same day. A block deal is a single large trade, above a minimum size set by SEBI, done in a special trading window.
These deals show when big investors, institutions or promoters move in or out. One deal is a single data point; the reason behind it is often not public.
In the US
US companies have no promoters in the Indian sense. Large institutions report their holdings every quarter, and insiders (directors and top managers) must report when they buy or sell their company's shares.
Where PositoAI fits
The Pattern tab shows a company's promoter, FII, DII and public holding and its pledged shares over recent quarters. The Flows section lists bulk and block deals across the NSE and BSE, grouped by FII, DII and others. A high pledge also appears as a flag on PosiFlag.
Key terms
- Shareholding pattern
- Quarterly breakdown of who owns a company: promoters, FII, DII, public.
- FII / FPI
- Foreign institutional (portfolio) investors: funds and institutions from outside India.
- DII
- Domestic institutional investors: mutual funds, insurers, banks, pension funds.
- Pledged shares
- Promoter shares used as security for a loan; a common warning sign when high.
- Bulk deal
- One investor trading more than 0.5% of a company's shares in a day.
- Block deal
- A single large trade above SEBI's minimum size, in a special window.
Try it
Promoters of made-up company River Steel own 60% of its shares, and half of their shares are pledged. What part of River Steel's total shares is pledged?
Half of 60% is 30%. So 30% of all River Steel shares are pledged, a large amount that could face forced selling if the price falls sharply.
See it live on PositoAI
Open Infosys on PositoAI and click the Pattern tab: compare the FII and DII holding with a year ago, and check the pledged figure. Then open Flows and look at the latest day's bulk and block deals.
What this does not tell you
Institutions and promoters can be wrong, and their buying or selling has many possible reasons. A change in holding is a clue to look into, not a signal to copy. Zero pledging does not make a company safe, either.
Quick quiz
Who are DIIs?
DIIs are domestic institutional investors: mutual funds, insurance companies, banks and pension funds.
What does it mean when promoters pledge shares?
Pledging means using shares as collateral to borrow; a sharp price fall can lead to forced selling.
Why is high pledging a warning sign?
If the price falls, lenders may sell pledged shares, which can push the price down further.
What is a bulk deal?
A bulk deal crosses 0.5% of the company's shares by one investor in one day, and is published the same day.
Which PositoAI tab shows promoter, FII and DII holding?
The Pattern tab shows the shareholding pattern over recent quarters, including pledged shares.
Answer every question on this page correctly to complete this PosiStep.
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PosiCourse is for education only. It does not recommend buying or selling any share. Examples with made-up numbers are not real companies. PositoAI is for research and education only and is not investment advice.