InvestorQ : Is HDFC Bank attractive after the stock split?
swati Bakhda made post

Is HDFC Bank attractive after the stock split?

Ria Jain answered.
3 years ago

Stock split is just a change in the face value of the stock and hence it does not really impact the wealth of the stock. Instead of holding 500 shares of Rs.10 par value, you hold 1000 shares of 5 par values after a 1:1 split. That is a similar proportion fall in the market price too. But the stock split has another important advantage.

When stocks are split the price reduces and comes in within a more tradable and confidence range. After the split, HDFC stock price came down from around the Rs.2200 levels to the Rs.1100 levels. What this does is to increase the retail appetite for the stock and that normally has a positive impact since a lot of pent up demand for the stock kicks in. That is one of the reasons, fundamentally strong companies benefit from a stock split, although the basic value of the stock remains the same.