On the ex-date of a corporate action, the exchange adjusts the share price to account for what shareholders are receiving, so the price can fall sharply without anyone actually losing money. If your P&L looks alarming around a dividend, bonus or split, the fall is usually this mechanical adjustment, not a crash.
Why does the price fall on the ex-date?
Because from the ex-date, a buyer no longer gets the entitlement. Take Lakshmi, who holds 60 shares of Kaveri Motors at ₹500, after the company has declared a ₹20 dividend. On the ex-date the price opens near ₹480. A new buyer pays ₹480 and gets no dividend; Lakshmi's shares now show ₹480, but ₹1,200 of dividend is on its way to her bank. Her total position (shares plus incoming cash) is still about ₹30,000. The screen shows a ₹1,200 "loss" that isn't one.
The same logic scales up for bigger actions. In a 1:1 bonus, the price roughly halves on the ex-date. In a 5-for-1 split, it drops to about a fifth. The exchange also resets the previous close and the day's price bands to the adjusted level, so the chart doesn't register it as a real fall. (Which dates drive all this is covered in what is the difference between record date and ex-date.)
| Action | Price on ex-date | What offsets it |
|---|---|---|
| ₹20 dividend | Down ~₹20 | Cash arriving in your bank |
| 1:1 bonus | Roughly halves | Double the shares, arriving in demat |
| 5-for-1 split | Roughly one-fifth | Five times the shares |
Why does my P&L look wrong in the app?
Timing. The price adjusts on the ex-date, at market open. The offsetting piece (the cash, or the extra shares) arrives days later. In between, the app is comparing an adjusted price against your old quantity and old average price, so the P&L can show a steep, scary loss (or occasionally an absurd profit).
For bonus issues and splits this is so common that we have a dedicated article: how do bonus and stock split shares reflect in my account. Once every new share is credited, quantity and average price are adjusted together and the P&L snaps back to reality. Nothing needs fixing by you.
Also remember that holdings P&L can move outside market hours for unrelated reasons. End-of-day prices replace the last traded price after the close, as explained in why does my P&L change after 3:30 PM. Around a corporate action, both effects can stack, which is when screenshots start circulating in family WhatsApp groups.
So do corporate actions ever change my real wealth?
The adjustment itself never does. It's designed to be value-neutral. What changes your wealth is the market's opinion of the action afterwards: investors may bid the stock up because a bonus signals confidence, or mark it down because a rights issue signals hunger for cash. That re-rating is genuine price movement, and it can go either way.
Things to keep in mind
- Alerts and GTT orders can misfire because of extreme price movements. Rupeezy automatically cancels your GTT orders before the ex-date, so you might have to setup new stoploss GTTs.
- Judge nothing on the ex-date morning. Compare the price move with the entitlement value before concluding you've lost money.
- Your P&L is only trustworthy again after all cash or shares from the action have been credited.
- Charts are usually shown adjusted for past actions, so a historical "fall" on an ex-date may not have been a fall at all.
- A value-neutral adjustment today doesn't prevent genuine gains or losses tomorrow, the market still judges the action on its merits.