bonus issue

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student (Querist)

02 July 2008 whenever co declares a bonus issue it is a positive point for market to raise the stock price.

then why that is not true with reliance power IPO?

CA Anand Sarda

CA Anand Sarda (Expert)

02 July 2008 Since the company is paying dividend out of the funds of the company. thereby reducing the networth, the market price of the company will fall and same happens will all the companies.

student

student (Querist)

02 July 2008 bonus issue does not mean that co pays dividend (cheques) therefore no reduction in funds of co.only the reserves will go down & share capital increases (no funds inflow or outflow) .it is just a book adjustment.
AS SOON AS THIS ANNOUNCEMENT COMES IN MKT SHARE's MARKET PRICE INCREASE

CA Anand Sarda

CA Anand Sarda (Expert)

03 July 2008 Oh iam extremely sorry K. I misunderstood the question as dividend declaration. Ya as u said the price of stock should increase. The price of the stock of Rpower was increased from 360 to 430 within few days of declaration of bonus news. But the price couldnot sustain because the record date was not declared. Only the Bonus issue was declared but not the record date.

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