Split

1.            What is a Stock Split?

A stock split occurs when a company increases the number of its outstanding shares while reducing the price per share proportionally. This process does not affect the company’s overall market value but makes individual shares more affordable and accessible to investors.

2.            How Does a Stock Split Work?

For example, if a company announces a 2-for-1 stock split:

  • An investor holding one share priced at ₹1,000 will now own two shares, each valued at ₹500.
  • The total investment value remains ₹1,000, but the number of shares doubles. Reasons Companies Opt for Stock Splits
  • Improved Liquidity – More shares in circulation make trading easier.
  • Higher Market Participation – A lower stock price attracts retail investors.
  • Enhanced Perception – Companies often use stock splits to create a positive market sentiment.

3. What is Reverse Stock Split ?

A reverse stock split reduces the number of shares while increasing the price per share. For example, in a 1-for-2 reverse split, every two shares merge into one, effectively doubling the share price. This is often done to meet stock exchange requirements or strengthen investor confidence.

Stock splits are a common strategy for growing companies looking to make their shares more attractive to investors. Want insights into recent stock splits and their impact on the Indian stock market? Stay updated with Bullish Bootcamp! 🚀

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