The process of dividing the outstanding shares into further smaller shares is known as stock splits.
In this the market value of the total outstanding shares of a company remains the same but market value of a single share is reduced in proportion to the no of shares extracted out of a single share. For example: Suppose there is a stock whose market value per stock is Rs.2,000 and a company decides for a stock split into 10 shares, then each share will have a market value of Rs.200.
Will I Incur a loss?
No, as quoted earlier the total market value of the outstanding shares remains the same. Considering the above example: Mr. John has a stock of Company X with a market value of Rs. 2,000 per share & the company decides to split the stock into 10 shares then each share will have a market value of Rs.200. Mr. John will have now 10 shares into his portfolio with Market Value of Rs. 200 each, thus equaling his portfolio value of Rs. 2,000 again.
Why does a Company do a Stock Split?
A company goes for a stock split, when it finds that the liquidity of its stock in the market is very less due to high value of its stock in the market is very less due to high value of the stock. An average investor generally doesn?t not prefer trading in a highly valued stock and lowering the stock value helps increasing the stock liquidity.
Similarly, reverse of the stock split can also be done by the company that is cumulating a no of stocks into one. This is known as reverse stock split. Reverse stock split is usually done in cases when the stock price of a company is very low.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 - 71934200/71934263;Website www.motilaloswal.com. Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 7188 1000. Registration Nos.: Motilal Oswal Financial Services Ltd. (MOFSL)*: INZ000158836 (BSE/NSE/MCX/NCDEX);CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN 146822; Investment Adviser: INA000007100;PMS: INP000006712;Insurance Corporate Agent: CA0579 .Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs and IPOs. *Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. *Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. *Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market are subject to market risk, read all the related documents carefully before investing.
Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: email@example.com, Contact No.:022-71881085.
Regd office : Motilal Oswal Tower , Rahimtullah Sayani Road , Opposite Parel ST Depot , Prabhadevi, Mumbai -400025; Tel No.:022 3980 4263. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 -3080 1000. Registration Numbers: MCX 29500, NCDEX -NCDEX-CO-04-00114. FMC Unique membership code : MCX : MCX/TCM/CORP/0725, NCDEX: NCDEX/TCM/CORP/0033. Website: www.motilaloswal.com Investment in Commodities is subject to market risk and there is no assurance or guarantee of the returns. Please read the Risks Disclosure Document and Do's & Don'ts prescribed by the commodity Exchanges carefully before investing. Details of Compliance Officer: Name: Ms Sharmilee Chitale, Email ID: firstname.lastname@example.org, Contact No.:022-38281085.
It seems you have logged in as a Guest, We cannot execute this transaction.
Would you like to open an account to avail the services?
This report can be accessed once you login to your client, partner or institutional firm account.