Adjustments for Corporate Actions (Bonus, Rights & Newly Issued Capital)
- Index calculation needs to be adjusted of issue of Bonus or Right shares, if no adjustments were made, discontinuity would arise between current value of index and previous value despite the non-occurrence of any economic activity
- At the BSE Index Cell, the base value is adjusted, which is used to alter market capitalization of the components stocks to arrive at the SENSEX value. The cell keeps a close watch on the events that might affect the index on a regular basis and carries out daily maintenance of all the 19 Indices
- Adjustments for Right Issues
o When a company issues bonus shares, the market cap does not undergo any change, so there is no change in the Base Market cap, only the ‘number of shares’ in the formula is updated
- Other issues
o Base market cap adjustment is required when new shares are issued by way of conversion of debentures, mergers, spin-offs etc. or when equity is reduced by way of buy-back of shares, corporate restructuring etc
- Index calculation needs to be adjusted of issue of Bonus or Right shares, if no adjustments were made, discontinuity would arise between current value of index and previous value despite the non-occurrence of any economic activity
- At the BSE Index Cell, the base value is adjusted, which is used to alter market capitalization of the components stocks to arrive at the SENSEX value. The cell keeps a close watch on the events that might affect the index on a regular basis and carries out daily maintenance of all the 19 Indices
- Adjustments for Right Issues
o When a company issues bonus shares, the market cap does not undergo any change, so there is no change in the Base Market cap, only the ‘number of shares’ in the formula is updated
- Other issues
o Base market cap adjustment is required when new shares are issued by way of conversion of debentures, mergers, spin-offs etc. or when equity is reduced by way of buy-back of shares, corporate restructuring etc
 |
Subscribe to Ashwin Group |
Visit this group |
No comments:
Post a Comment