What It Means
Ex-date is the trading day a stock starts trading without entitlement to an upcoming corporate action, like a bonus issue, dividend, or stock split. It's also the day the exchange mechanically adjusts the stock's price to reflect that action.
How It Works
For a bonus issue, the exchange applies a fixed adjustment factor of (A + B) / B, where A:B is the bonus ratio, and divides the pre-ex-date closing price by that factor. The stock isn't losing value on paper. It's being re-priced to account for the extra shares now in circulation.
Example
BSE Ltd fixed a 2:1 bonus issue with its ex-date on May 23, 2025. The stock had closed the previous session at ₹6,996.5. Applying the adjustment factor of (2+1)/1 = 3 gives a theoretical ex-date price of about ₹2,332, and the stock actually opened that day around ₹2,335, before trading up to roughly ₹2,359.
Related Terms
- Record Date: the shareholder-eligibility cutoff, usually the same day as the ex-date under T+1 settlement
- Stock Split: another corporate action that triggers the same kind of ex-date price adjustment
- What Is a Bonus Issue?: the full mechanics and price-adjustment math