If you want to make the most out of your investment then you have to know the important dates in the stock market and the difference between the dates given below.
With the help of these dates, you can act smart and can know exactly when to buy and sell the shares in the stock market while being entitled to dividends and bonuses.
1) Announcement Date:-
The date on which a company announces the bonus/split/dividend etc. is known as the announcement date.
Say, a company has announced a bonus in the ratio 1:2 on 10-6-2019.
2) Record Date:-
The date on which investors must have shares in their Demat account to enjoy the benefit (of bonus shares, splits, dividends, etc.) was declared at the announcement date.
On this day, if you are holding shares then you are entitled to get a bonus.
3) Ex-Bonus Date (excluding bonus):-
The date on which the share price is adjusted on the stock market according to the bonus ratio.
The date on which shares start trading at a revised price in the stock market.
This date comes between the announcement date and record date.
Here, you have to buy shares at least one day before the ex-bonus date because the Indian system follows a T+2 day settlement system. So, if you buy on 23-7 then the shares will come to your Demat on 25-7.
Q) When to start buying shares to be eligible for bonuses or dividends?
A) You can start buying from the announcement date to one day before the ex-bonus date.
Don’t buy on the record date.
After giving a bonus in the ratio 1:2 (in our example) the share price decreases proportionately, meaning it is halved.
So, assuming the current market price for Reliance is Rs. 1200. This price is also known as a previous bonus or cum bonus. After being given a bonus, the post bonus, also known as ex-bonus is Rs. 600 and the face value will remain the same but the number of shares increases.
Minimum Bonus/Cumulative Bonus/(Before Bonus) price is Rs. 1200
Ex – Bonus (Post Bonus) price is Rs. 600.
If you want a bonus then you have to buy at a higher price and this higher price will last till before the ex-bonus date. The last date on which it would have traded at Rs. 1200 is 22-7-2019.
Buy before the Ex-Bonus Date and hold till Record Date+1.
Q) On which date does the price adjust?
A) Ex – Bonus Date.
The ex-dividend date is the date that stock shares change while not the dividend. Shareholders who acquire stock on the ex-dividend date are not entitled to a future dividend payout.
Since these shareholders leave out one in all the property that builds a stock valuable, the stock price drops by the extent of the quarterly dividend on the ex-dividend date.
For example, a stock that will pay a Rs 10 annual dividend can pay that dividend in 4 quarterly amounts of Rs 2.50 each. If the stock’s rate the day before the ex-dividend date is Rs 100 per share, that stock is going to be marked right down to Rs 99.75 at future day’s gap.
The stock’s payout date is the day you get hold of your dividend. If you get stock earlier than the ex-dividend date, which suggests you will be an investor in the document via the document date, you will get hold of your dividend on the payout date.