What are Holdings? What are the different constituents involved in Shareholdings ?
Besides retail investors, a company’s shares are held by promoters, foreign & domestic institutions (large investors) and mutual funds. Promoters are the ship captains and control the company’s direction. Along with institutional and mutual fund holdings, a change in their holdings can indicate performance outlook for the stock.
Two main avenue’s focused under holdings are -
Promoters Holding trend
Promoters are often individuals or corporations who buy a proportion of stock from the company with an intent to generate profit. Promoters could also be board members of the company and have prominent power within the organisation. Promoters holding trend indicates the growth/decline in the shares held by the promoters. Increasing promoters holding percentage represents a healthy growth for the company and gives an optimistic outlook for the shareholders. This data is calculated as the number of shares held by promoters by the number of outstanding shares given by the company.
Institutional Holdings Trend
Institutions like mutual funds, pension funds, insurance companies, endowment funds etc often buy shares from companies with an intent to retain the shares for a long period of time. DII, also known as domestic institutional investors conduct an extensive research about a company before buying shares from them. Increase in this ratio gives a healthy outlook to retail investors as the institutional fund managers are becoming more bullish about the particular stock.