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 ship captains and control the company’s direction. Along with institutional and mutual fund holdings, a change in their holdings can indicate the performance outlook for the stock.
Two main avenues focused under holdings are -
Promoters Holdings Trend
Promoters are often individuals or corporations who buy a proportion of stock from the company with the intent to generate profit. Promoters could also be board members of the company and have prominent power within the organization.
The promoters holding trend indicates the growth/decline in the shares held by the promoters. Increasing promoter holding percentage represents healthy company growth and gives the shareholders an optimistic outlook.
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 the intent to retain the shares for a long period of time. DII, also known as domestic institutional investors, conduct extensive research about a company before buying shares.
An increase in this ratio gives a healthy outlook to retail investors as the institutional fund managers are becoming more bullish about the particular stock.