Why stock comes down after dividend declaration

Hi,

Why stock prices comes down after dividend declaration? For example today's stock AARTIDRUGS.

That is the adjustment . If a stock is declared 3rs dividend , then next day it will open 3rs lower once the dividend is declared . Atleast that is the theory . But practically after the adjustment , People also sell off the shares , sometimes the adjust turns out to be more etc ...

Hi there, so what happened there ? well
In Short

Future= Spot(the current market price of the stock) + Carry Cost(represents the opportunity cost of delaying the transaction, eg: -interest rate used to determine the present value) - Benefits(Dividend)

or

This happened as when a dividend is paid the paid out money as dividend no longer belongs to the company and thus this reduction is reflected in the company’s market capitalization. So the people who bought the share(s) after the ex-dividend date (before which one needs to buy the share to be eligible to get the dividend) can no longer claim it, hence the exchange adjusts the price downward to show this fact.

Hope this helps. :thumb: