Price sensitive date seriously affects the share price in stock trading day. So, stock traders need to put extra care on price sensitive dates. In this article, you will learn about 5 price sensitive dates. You should put more emphasis on these dates.
What is price sensitive date?
In this article, I have defined price sensitive date is a date which influences stock price up or down. In stock market, some announcements directly affect on stock price. Stock traders should learn these dates earlier in order to prevent lose or catch opportunity. Moreover, you should learn stock market basic knowledge.
Top 5 price sensitive dates
1. AGM/EGM Date
2. Dividend Declaration Date
3. Spot Date
4. Record Date
5. Quarterly Performance Announcement Date
Read the full article in order to learn these dates effect.
1. AGM/EGM Date- 1st Price Sensitive Date
Annual General Meeting (AGM) or Extra-ordinary General Meeting has both positive and negative impact on share price. A public limited company has to call AGM at the end of financial year. AGM is mandatory for a listed company to remain A or B category status. On the other hand, EGM is not mandatory for a company.
Generally, a company circulates AGM date in stock exchange. When investors and traders learn about the date, they want to guess the probable agenda.Almost all companies have a common agendum that is dividend issue. If investors expect that company will announce standard dividend, they
want to hold stock. Otherwise, they like to sell stock. Many traders want to position trade. They like to entry or exist from this company. As a trader or an investor, you should care early about AGM date so that you can take suitable decision. Many traders and investors make mistakes as they trade without knowing the AGM date impact.
2. Dividend Declaration Date- 2nd Price Sensitive Date
Dividend declaration date is the top reason to decrease or increase a stock price. If a company announces low dividend, its share price will decrease from next trading day. On the other hand, if a company announces high dividend, its share price will increase. However, investors never satisfy how much dividend a company provides.
Hence, share price starts to fall because of dividend declaration effect.As you can’t predict the reaction accurately, you should keep distance from dividend declaration effect. Otherwise, you may lose huge capital.
3. Spot Date- 3rd Price Sensitive Date
Spot date is the previous continuous two days of record date. But, Spot date is not applicable to all stock exchanges. But ex-dividend date is common in most stock exchanges.Security exchange law allows spot date so that transactions can be settled without waiting for T+2 or T+3. Generally, share price goes down in spot market.
Many investors and traders want to exit from trade in spot date as share price drastically fall after record date. There is an advantage of spot date. If you stock in spot date, you will get next dividend. That means, you will entitle to get dividend even you buy stock a day before the record date (in the spot market). If you are a trader, you should avoid spot date effect.
4. Record Date- 4th Price Sensitive Date
Record date is assigned by exchange law to determine actual shareholders. On this date, trading is halt. So, if you want to get dividend, you should buy at least in spot date or ex-dividend date. Otherwise, you will not entitle to get dividend.
You should learn about record date effect to decide whether you take dividend or not. Because share price will fall more than your dividend gain after record date. You may get 8% dividend yield. But your holding may lose 20% to 30%. Hence, you should take any action carefully.
5. Quarterly Performance Announcement Date- 5th Price Sensitive Date
A company announces quarterly financial statement. From this statement, you can learn EPS and some other financial information. If a company announces negative EPS, its stock price starts to fall and vice versa. A year consists of 3 quarters.
After the end of a quarter, company has to show the actual financial performance. This is a serious price sensitive information. You should analysis the quarterly performance date. Best strategy to avoid trading before confirming the quarterly financial performance effect.
Let’s cite an example
A textile company announced AGM date on 13 November. Share price of this company before announcing AGM was 24. After declaring AGM date, share price reached at 23. On AGM date, this company announced 10% cash dividend and 5% stock dividend.
After this announcement, share price circulated between 23 to 22. Later, company disclosed quarterly financial statement. EPS was minus 0.57. Next day, share priced reached at 21.1 in a single trading day. After that, spot date started from 16 November. In first spot date, its price reached at 20. After record date, its price touched at 18.2. What is loss the percentage after 5 price sensitive dates effect?
Here, Cash dividend per share was 1 (10 face value*10%). Stock dividend per share was 1 (100*5%*20)/100. As Market value per share was calculated 20. Total dividend yield at 24 per share market price was 8.33%(2/24)*100. Transaction Effect percentage was 24.17% (24-18.2)/24*100. Ultimate Loss percentage was 15.84% (24.17%-8.33%)
I have shared top 5 price sensitive dates because I had to lose money without following these dates. In this post, I wanted to warn you. If you have care about these 5 dates, you will avoid trading mistakes. Moreover, stock business is the most difficult and risky business. Use stop loss if you make any trading mistake. One mistake is enough to kill your significant capital. Financial Ask always like to assist you. Stay connected with Financial Ask.