HDFC Bank Share Falls After Bonus Issue Adjustment – Here’s All You Need To Know
Stock market investors were quite excited when India’s largest private lender announced its first bonus issue. But, on Tuesday 26 August, HDFC Bank Share fell slightly as the price for the bonus issue was adjusted. This is a natural process that happens after every bonus issue, and is important for both new and old investors to understand.
What is the meaning of HDFC Bank Share Bonus Issue?
Last month, when HDFC Bank declared its quarterly results, the bank announced its first-ever bonus issue. The bonus ratio has been kept at 1:1. Meaning if you had 100 shares till Monday, then now 200 shares will be shown in your account. But remember, the total value will remain exactly the same, only the share price gets adjusted.
For example, if an investor had 100 shares worth ₹1,940, then his total investment value would be ₹1,94,000. After the bonus, he will have 200 shares, but the price of one share will decrease proportionately. That means the gain or loss will depend only on the market movement, the bonus issue itself does not make any extra money.
This is the first time in HDFC Bank share history
The biggest thing is that this is the first bonus issue of HDFC Bank in its 30+ years of trading history. Earlier the bank had only done share splits. In 2011, 1 share of ₹10 was split into 5 shares of ₹2. After that in 2019, 1 share of ₹2 was again split into 2 shares of ₹1. But the bonus issue was never announced. That is why the market was very excited this time and this is a special moment for the shareholders.
HDFC Bank Share Ex-Date and Record Date
The company has fixed the record date as 27 August, but since there is a stock market holiday on that day, the shares started trading on ex-date from Tuesday, 26 August. Meaning, any shareholder who holds shares till the trading close on 26 August will get bonus shares.
On Tuesday, the stock fell 1.1% to trade at ₹ 970.9, which was the result of bonus adjustment. This fall is not a scary thing for investors, because the price adjusts proportionately and it does not have any negative impact on the total portfolio value.
Which other stocks are in bonus along with HDFC Bank Share?
Not just HDFC Bank, but Karur Vysya Bank’s shares have also been adjusted for its bonus issue. They had announced a bonus issue at the ratio of 1:5. Meaning if someone has 5 shares, he will get one extra share.
Apart from this, there are many other big corporate actions lined up in the market this week. Gillette India’s shares will be ex-dividend on 26 August where the company has announced a final dividend of ₹47. Vedanta’s second interim dividend ex-date is also 26 August.
Vedanta is considered quite generous for dividend payouts. The company had declared 4 interim dividends in FY25 itself. For this reason Vedanta has always been a strong choice for dividend lovers.
Big Movement in Market Capitalization
Last week, 8 out of the top 10 companies witnessed a tremendous jump in market value, in which Reliance Industries was the biggest gainer. Tata Consultancy Services, Bharti Airtel, ICICI Bank, Infosys, Hindustan Unilever, LIC and Bajaj Finance were also included in the gainers list. But during this period the market valuation of HDFC Bank Share and SBI fell slightly.
This contrast shows that short-term volatility is normal during bonus issue, but for long-term investors it is a rewarding process.
Why is HDFC Bank Share’s Bonus Issue important?
This first bonus issue of HDFC Bank has great symbolic importance. This signals to the market that the company is confident about its growth and shareholder value creation. When a reputed and established private lender announces its first bonus, it also has a psychological impact.
For investors, this is an opportunity to expand their holdings without any extra cost. If you believe in the long-term growth story of HDFC Bank Share, this bonus will act as an extra boost.
Disclaimer:
This article is for informational purposes only. The views and information given in this are not financial advice of any kind. Investing in the stock market always comes with risk. Consult your financial advisor before taking any investment decision.
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