WHAT IS STOCK
SPLIT
Stock splits get many investors all excited, but in many ways
they're really non-events. One reason companies split shares is so that the
price will remain psychologically appealing. Reducing a stock's price makes some investors think that it's a better value.
All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision by the company's board of directors to increase the number of shares that are outstanding by issuing more
shares to current shareholders.
A stock's price is also affected by a stock split. After a split, the stock price will be reduced since the number of shares outstanding has increased.
A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.
A stock split can also result in a stock price increase following the decrease immediately after the split. Since many small investors think the stock is now more affordable and buy the stock, they end up boosting demand and drive up prices. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume this growth will continue in the future, and again, lift demand and prices.
A stock's price is also affected by a stock split. After a split, the stock price will be reduced since the number of shares outstanding has increased.
A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.
A stock split can also result in a stock price increase following the decrease immediately after the split. Since many small investors think the stock is now more affordable and buy the stock, they end up boosting demand and drive up prices. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume this growth will continue in the future, and again, lift demand and prices.
For example, if Infosys
shares were worth Rs. 40000 each, investors would need to purchase Rs. 4000000 in order to own 100 shares. If each share
was worth Rs. 4000, investors would only need to pay Rs. 400000 to own 100 shares. Lower share prices allow
retail investors to invest in the stocks. There is also a mental barrier that
higher priced stocks will not increase as much as lower priced stocks.
LIST OF COMPANIES STOCK
SPLIT IN 2015
|
Company
|
Old FV
|
New FV
|
Split Date
|
|
Ajanta Pharma
|
5
|
2
|
20-03-2015
|
|
Tech Mahindra
|
10
|
5
|
19-03-2015
|
|
Bank of Baroda
|
10
|
2
|
22-01-2015
|
|
Corporation Bk
|
10
|
2
|
22-01-2015
|
|
RS Software
|
10
|
5
|
21-01-2015
|
|
Berger Paints
|
2
|
1
|
08-01-2015
|
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