pl. can anyone clarify

stpmds · #1 15th October 2004, 09:23 PM

today i was browsing the nse website and selected kotakbank to study about its eq.share movements. it has stared at rs.140 and the highest it has reached is rs.410. but the strange thing is that the price fell very steeply on a paraticular day. on 24-8-04 closing rs.356, and on 25-8-04 opening rs.170. can any of the senior members explain me the phenomena?

binzy · #2 16th October 2004, 01:13 AM

Hi,

Before you panic, read the following excerpt from the NSE website:

27-07-2004 Kotak Mahindra Bank Limited has informed the Exchange that August 26, 2004 has been fixed as Record Date for the purpose of ascertaining the Shareholders [members] eligible for allotment of Bonus Shares.
27-07-2004 Kotak Mahindra Bank Limited has informed the Exchange that at the AGM of the Bank held on July 26, 2004, the shareholders of the Bank approved and passed the following Resolutions: 1) declaration of dividend @24% as recommended by the BoD's. 2) Increase in the Authorized Share Capital of the Bank from Rs.100 crores to Rs.200 crores. 3) Issue of Bonus equity shares in the ratio of one share for every one equity share held. 4) Issue, offer and allotment of equity shares from time to time, to the employees of the Bank and its subsidiary companies, in accordance with the ESOP Scheme (s) of the Bank under SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

This means the company had declared 1:1 bonus, and one bonus share was issued for every one equity share that was already held by investors. The stock went ex-bonus on 25 August 2004. On this day, the share price was divided by two (355.75/2 is approx. 170). To read more about bonus issues and stock splits, go to http://www.equitymaster.com/detail.a...6/2004&story=1

Cheers!

stpmds · #3 16th October 2004, 10:11 PM

thank you very much binzy. your explantion is really in detail. my doubts cleared.