You must have come across instances where you log in to your app, scan through your holdings, and realize that the average price of a stock has changed. A few days later, you notice that the quantity of holdings has changed as well. Panic sets in—you make a few calls to your broker, ask around, only to find out that there was a corporate action on this stock.
Worry no more! Upstox Pro has introduced a nudge to indicate which stock is about to undergo a corporate action. This feature will not only inform you about an upcoming corporate action but also calculate its impact based on your current holdings. It will determine the additional shares you will receive in the case of a bonus issue or stock split and calculate the amount you are entitled to in case of a dividend payout.
In this phase, we cover three corporate actions: Dividend, Split, and Bonus.
Let’s understand this with an example:
If you currently hold 100 shares of TCS, and the company announces a bonus issue in the ratio of 1:1 with an ex-date of February 1, 2024, this feature will calculate the impact of the bonus issue on your existing holdings. It will also provide key details, including the announcement date, ex-date and the record date.
Why is it crucial for you as a trader / Investor?
For swing traders and investors, understanding corporate actions and also understanding its impact in real time is a key to making strategic moves in the market. Events like bonus issues, stock splits, or dividend announcements can impact stock prices, liquidity, and influence market sentiment. When traders and investors are informed on how these events can affect the market, they can make better decisions—whether it’s adjusting their positions, timing their trades, or taking advantage of opportunities that arise. With this knowledge, traders can stay ahead of the game of investing .
Who is this feature for?
This feature will be useful for all investors, especially swing traders and short-term investors who hold equities and want to stay informed about upcoming corporate actions that could influence their investments.
For short-term investors and swing traders:
- Market Speculations: Corporate actions can increase trading volumes for a particular stock (scrip). This presents opportunities for short-term or swing traders.
- Price Volatility: Events like stock splits, dividend announcements, or rights issues can create significant short-term price volatility, allowing traders to buy low and sell high quickly.
For long-term investors:
- Portfolio Adjustments: Based on the expected impact of a corporate action, long-term investors can adjust their holdings in a company and benefit from better returns through informed management.
- Company Health Assessment: Understanding the nature of a corporate action, such as a bonus or dividend increase, provides insights into a company’s financial health and future growth potential, helping long-term investors make informed investment decisions.
With this feature, users can gain greater control over their investments and trade with confidence, knowing they have all the necessary information at their fingertips.
If you are interested to learn more about how to find this feature and how to use it, you can view our post here.