Hello, I am having some confusion that’s why I’m posting this here.
I had bought TV Today Network for an average of ₹307 a piece for dividend earning purposes of which ex & record date was last Monday.
Post that day the price got corrected & subsequently Trading-view has updated the chart for the same.
Price of a scrip always gets updated post ex-date. Then how is it possible that my average buy price remains the same as pre-exdate. This should be updated too on post ex-date.
Is not it so?
Usually, the dividend impact happens on a market price and not on an average price. Hence, the average remains the same post ex-date also.
Hi @aritra Dividend has no effect on the average buy price. Let me take an example to help you understand this:
Assume you have a share of ABC which you bought at Rs. 100 and the company paid a dividend of Rs. 20 per share. Now on the ex-date the share price will fall by Rs. 20 which will show a notional loss of Rs. 20 in your portfolio and Rs. 20 has come to you bank account. So overall, you did not lose your investment value per se.
Now Rs. 80 which you are assuming should be your average buy is not actually your average buy price but you can consider this price as break-even point (BEP) which essentially means that if you sell at that price, you will incur no profit, no loss.
Average buy prices only get updated for stocks-splits and bonus issue, not for dividends.
Yes, you are absolutely right. This is what I am trying to convey. This is the way it is & it’s wrong. It should have been the other way around. It seems like a lousy way to handle stock price on post ex-date.