Trading Platforms

Introducing Corporate Actions on Charts

Corporate actions

We’re happy to announce that we’re the first brokerage in India to have introduced corporate actions on charts on all equity & futures near-month scrips on NSE as recently implemented and announced on the Notice Board. Corporate action adjusted charts with details helps traders / investors to learn about previous corporate actions by companies’ managements. It also helps get the correct information about stocks and understand stock movements in the right context. Here’s how the charts look like after this update:

Corporate actions

Types of Corporate Actions on Charts:

1.Dividends – We have incorporated the dividends declared by all companies on NSE on the charts and have denoted the corporate action as ‘D’. Upon hovering over the icon, you will get the exact details of the date and amount of dividend declared per share. The dividend amount is “not added” to the stock price as dividends are paid directly as cash to the shareholders. Since our charts are corporate action adjusted, historical actions such as splits, bonuses and rights issues can reduce the stock price in proportion to the ratio of the corporate action. For example, Yes Bank did a split at 10:2 on 21st September 2017. Before the split, the price was Rs. 1880 per share (Previous Closing Price * 5 considering it was a 10:2 split). The previous dividend was paid on 29th May 2017 at Rs. 12 per share. To calculate the dividend yield as on the date of dividend payment, one must re-calculate historical stock prices before the corporate action adjustment. In this case it is 0.8%. It is computed as Dividend / (Original Price of the stock at the time before future corporate actions) * 100. Computation = [12 / (298.7 * 5) * 100]. We have used this example to help you understand the context of the dividends with regards to historical data which has been adjusted if there were any splits etc.

2. Splits – Splits are usually done when the managements of companies feel that the price of their stock has risen too high and that it can have a psychological impact on the shareholders. They feel that the price alone can change their perception about the future or their expectation of the future. They could also do it if they feel that the high price can affect the liquidity as it restricts the number of shares that speculators can afford to buy and sell. If the stock is reasonably priced, then it will retain interest from all types of traders. Stocks which have gone too high and have not split their shares, have seen a lack of interest from retail traders simply because the margin requirement to trade such stocks is too high and that it restricts their ability to manage their money efficiently. In a split, the company slices one share into many. In a 10:1 stock split means that one share has been split into 10. Hence, the price drops to 1/10th of the original price and the quantity is multiplied by 10. In theory, a stock split does not impact the stock in any way. In practice, it does.

3. Bonus Issues – Bonuses are similar to dividends in some ways. They are both a way of distributing income to shareholders. When a company declares dividends, it pays cash to shareholders, but when it issues bonus shares, it doesn’t. The shareholders get additional shares and it is more tax efficient than declaring dividends. Basically bonus shares are created from a portion of the reserves (Shareholders’ equity). Theoretically, the stock price should reduce after a bonus issue as it proportionally reduces the reserves of the company. The shareholders can sell the bonus shares whenever they like if they want to encash the income. However, it has an inherent advantage over dividends. Basically, dividends are cash payouts! It cannot appreciate. However, if bonus shares are held, it can appreciate and further help in creating wealth. In the context of corporate action adjustments on charts, it helps to learn when companies have issued bonus shares and the effect it has had on the stock price subsequently. In theory, since the supply of shares increase via bonus shares and proportionally reduces the reserves of the company and thus is bearish in the short-run. However, in practice it is different and depends on other prevailing factors too.

4. Rights Issues – Rights issues are a type of corporate action that allows existing shareholders to invest further into the company in proportion to their shareholding. It also gives promoters an opportunity to regain control of their company by not diluting their ownership. In fact, by the virtue of a rights issue, they get an opportunity to increase their total shareholding by buying up the shares which are unsubscribed by the existing shareholders. Rights issues are a convenient way of increasing their ownership in the company without attracting much attention or incurring much costs. Companies also opt for rights issues to keep the shareholding structure unchanged and keep away from activist investors, hostile acquisition attempts etc. Theoretically, rights issues have a bearish impact on stock prices for the following reasons:

  1. The supply of shares increase thereby reducing EPS in the immediate future.
  2. The offer price is discount to market which can encourage investors to sell the stock in the open market in the near future.
  3. The capital raised from the rights issue will have to be deployed and will take a long time to generate profits etc.

Points to note about Corporate Actions on Charts:

  1. All Corporate Actions are shown based on the ‘Ex-Date’
  2. The types of corporate actions are as mentioned above (Dividends, Splits, Bonuses, Rights).
  3. Corporate actions on charts are done for all charts with symbols marked on the particular dates.
  4. Pre-2010 corporate actions are not denoted on charts (However, the charts are adjusted for corporate action).
  5. If you don’t want the corporate actions displayed on the charts, you can disable it from the settings in the dashboard.

Retail traders in India are not given the proper information to trade / invest. We wanted to change this providing these features to help understand what corporate actions the listed companies are taking and the impact it has had on the stocks subsequently. I believe that this helps to trade more effectively. Also, if the charts are not adjusted for corporate actions, the analysis will be incorrect as the moving averages, indicators, drawings, chart patterns etc. will get adversely affected. Corporate actions can impact stock prices to a very large extent and thus it is important to know what has happened in the past. We hope you enjoy this update and if you have any questions or clarifications, feel free to get in touch with us in the comments section below.

Happy Trading!

Tejas Khoday

Tejas Khoday

Tejas is the Co-Founder & CEO at FYERS, the youngest team to get NSE’s broker license. He has a specialization in finance and has over 10 years of work experience spanning across proprietary trading, risk management, and broking. Tejas & his team started FYERS, a technology-focused brokerage as a mission to transform the trading/investment landscape in India.

31 Comments

  • Avatar Arindam Ghosh says:

    Hello, I am unable to match the adjusted price shown in Fyers with the values calculated in my excel. Is it possible to know how you are calculating? I tried with tatamotors. There was a bonus on 2015. The first few days matches, but later it deviates from the bonus calculated. The bonus was 109:6 @ 450. So I calculated as adj-close=(450*6+109*close)/115. I will really appreciate if you help me on this.

  • Avatar Ganesh says:

    hello sir,

    Nice initiative !

    Is it possible to update quarter result dates of scrips on chart?

    • Tejas Khoday Tejas Khoday says:

      Thanks Ganesh. Good suggestion! Although it might take some time. We haven’t started working on it yet.

  • Avatar Vishal says:

    Please improve the loading speed of higher timeframe intraday charts like 60 min, 120 min and 240 min. It takes too long for them to load even on a good internet connection with no other application running on the system. Just checkout the loading speed of higher timeframe intraday charts on Tradingview website. It hardly takes a second or two to load. Hope you will take this feedback positively and will come up with an appropriate solution.
    Thank you.

    • Tejas Khoday Tejas Khoday says:

      Hi Vishal, Our system calculates 60 minute/120 mins/240 mins timeframe charts based on 1-minute data and that is the reason it takes a bit of extra time. Calculating this data at the speed of your scroll might be a challenge at the moment.

  • Avatar Ram says:

    Hi
    pre market order features available? bcz manytimes I missed pre determined prices

  • Avatar Samika says:

    This feature has greatly improved my understanding about the various stocks available. Really appreciate the added feature.

  • Avatar Rajesh says:

    This will be very helpful for traders like us to know the complete performance of the script because of the corporate action.

  • Avatar Shesh195 says:

    Rocking update. Pls process my 30 day challenge. It is showing yet to be computed.

  • Avatar mahesh_Rangoon says:

    I appreciate Fyers for taking up such things. I am sure it will get better from here. Thanks for listening to our feedback and try to make more features available on Fyers Web just like Fyers One. The problem with Fyers One is that it takes time to start the application.

  • Avatar MD SAFDAR IMAM FATMI says:

    Tejas sir , please provide – VOLUME SPREAD ANALYSIS (VSA ) & VOLUME PROFILE ( VP) on FYERS WEB.

  • Avatar Shivanand says:

    Good update from fyers it will help short term traders in making trade decisions

  • Avatar Manesh says:

    First of its kind! A wonderful initiative by Fyers to help all the traders and it adds more clarity for the beginners to understand things better. Above all, it’s time saving and amazing user experience in knowing the stock movements.
    Thanks to Fyers!!
    #KeepGoing #HappyTrading

  • Avatar Ajay Sharma says:

    Fyers always provide way better feature with other compare another broker. Even the charts are getting adjusted automatically whenever there is corporate action. Fyers is really next generation broker happy to trade with FYERS.

    • Tejas Khoday Tejas Khoday says:

      Thanks for acknowledging our efforts Ajay! Yeah, we prioritize data as it is very important for trading. Stay tuned for more updates.

  • Avatar anita banu says:

    A very detailed and needed information..which helps to know the stock movements in the stock market

  • Avatar Rohan says:

    Its very informative update about stock. We can see Corporate Action in chart now. Thanks for the Update.

  • Avatar MUkr says:

    Very helpful update!

  • Avatar Suresh says:

    Great one, form the team this will very helpful for us in the trading and know the movement of the stock.

  • Avatar venkat says:

    This is how Fyers keeps clients happy by understanding the client’s needs and requirement, I appreciate Fyers. What a great update!

  • Avatar Moorthy says:

    These are the feature which is most needed for investors to make the right decision based on the corporate action. I am happy for all the updates Fyers bought throughout the year.

  • Avatar raju says:

    fyers introducing lot many feature in the platform . its all really most needed tools for investors and traders

  • Avatar soorya hz says:

    Earlier This Feature was only available on google finance . its good to hear that fyers has bought this feature into platform . an add on feature really helps investors to get corporate action informations

  • Avatar Shyam Rathod says:

    Nice update! I guess this is only web based platform to provide such feature. Way to go Fyers!

  • Avatar Feature says:

    I really appreciate Fyers for providing this. Fyers really knows how to keep them updated and unique from other.

  • Avatar ARUN KUMAR says:

    HI
    Very usefull updata from fyers its really helpfull for trading thank you

  • Avatar Maaya Suresh says:

    Very helpful in getting the correct information about stocks and its movements.

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