InvestorQ : As Majesco goes ex-dividend on 23 December, at what price will the stock trade in the market?
Dilmini Mercia made post

As Majesco goes ex-dividend on 23 December, at what price will the stock trade in the market?

Answer
image
Dawn Cherian answered.
4 weeks ago
Follow

This is an important day for investors to observe because it is the first time that a company is declaring a dividend that is as large as its current market price or CMP. Majesco, which declared a dividend of Rs.974 per share, will go ex-dividend when it opens for trade on 23 December. That means; only purchases till 22 December will be eligible for dividends.

In the midst of the confusion over the adjusted price to be considered as the basis for trading, the BSE has announced new price band rules. These rules pertain to adjustment of dividends in the stock price. The big question that most investors in Majesco are asking is what should be the adjusted price of the stock, after the dividend effect is removed?

As per the new rules that have bene put out by BSE, the adjusted price will depend on the difference between the closing market price on the previous day of trading and the dividend in rupee terms. For example, on Tuesday, the stock closed at Rs.985, so adjusted price of Majesco will be Rs.11 (985-974). Markets will use this as the base on Wednesday.

In the above case, the price advantage of Rs.11 over the dividend level is greater than the face value of Rs.5. However, if the stock price had had closed at Rs.977 on Tuesday, the adjusted price will be the par value of the stock at Rs.5 as it is higher than the difference of Rs.3; between the closing price and the total dividend declared.

Of course, there are tax aspects of dividend versus capital gains, but for that it is too late for any strategy as the last *** date got over on 22 December for Majesco dividends.

0 Views