A corporate actions Nudge to help users avoid mistakes
Every time there is a corporate action like a stock split in #IRCTC today and the stock price drops in adjustment, retail investors tend to buy the stock wrongly thinking that the stock has become cheaper. We now have a nudge to inform users.
If you had 1 share of IRCTC at a price of Rs 4500, you will now have 5 shares at Rs 900 each—4 new shares will be credited in 4 days after the stock split. This makes no difference in terms of the value of the stock. It isn’t cheaper just because the price is lower
Corporate actions like stock split, bonuses, rights issues, increase the number of shares in the company and hence reduce the price of the stock. This makes no difference to the value. It is like having 1 chocolate of 100 gms or 5 of 20 gms each, the value remains the same.
If you want to learn more about corporate actions and their impact on stock prices, do check out this on Zerodha Varsity.