Bonus Issue Defined
A bonus issue, also known as a stock dividend, is when a company distributes additional shares to its current shareholders without any extra cost. This
is usually done to reward investors and increase the stock's liquidity in the market. For HDFC Bank, this is a 1:1 issue, meaning one extra share for every share you own.
Eligibility Criteria
To qualify for the HDFC Bank bonus issue, you must own the shares before the ex-date. This date determines who is eligible. Ensure you buy the shares today, if you are interested in the bonus issue. This move is generally seen as a positive signal as it potentially increases the investor base.
Impact on Investors
The bonus issue will increase the total number of shares an investor holds, yet it doesn't add to the value of your holding. It can boost liquidity, as more shares might attract a wider range of investors. This usually leads to better price discovery and more trading activity, which helps the market become more efficient and liquid.
Market Response & Strategy
Bonus issues are usually received positively by the market, often leading to a short-term boost in stock prices. For Indian investors, the bonus issue is a good opportunity, but a long-term investment strategy should still be adopted. Do consult your financial advisor to align your investment with your financial goals.
