10 Factors Determining Market Price Action Post Rights Issue

Factors Determining Market Price Action Post Rights Issue Company management holding table to show the concept of bouncing back of share price after rights issue.

(2) Future Growth Prospects Of The Underlying Company

It is one of the most significant factors impacting share price action after rights issue. Not all rights issues will earn huge profits for its shareholders. Issues that can quickly provide the needed fuel (in form of money) at the right time can bring the company on the new growth trajectory.

If future growth prospects of the company appear to be bright, strong & realistic then stock price is likely to surpass the issue price quickly.

Some of the factors responsible for boosting future earnings of the company include optimum utilization of company’s workforce & capabilities, launching innovative products & services, increasing customer base or big order inflow, increasing sales margin, favorable government policies, implementation of cost reduction strategy & many more.

On the other hand, if the future growth prospects of the company appear to be poor, diminishing & unrealistic then the stock price is likely to slide further. Thus, future growth prospects play a significant role in determining the probable direction of the stock.

[Read Also: 10 Possible Reasons Behind A Company’s Rights Issue]

(3) Outlook Of Entire Industry Or Sector Of Working

It is one of the most unbeatable factors impacting share price action after rights issue. Every company works in one or more sectors for its business activities. The concerned sector will directly or indirectly affect the process of revenue generation for a company.

If a sector is outperforming in the economy then most of the companies belonging to the concerned sector are likely to outperform as compared to similar size company from a struggling sector.

Similarly, rights issue of a company that belongs to an outperforming sector is likely to produce higher returns for the investors.

On the other hand, rights issue of a company that belongs to an underperforming or struggling sector is likely to produce lower or even negative returns for the investors. This investor’s perception is also reflected in the share price of the company after rights issue.

Thus, it will be a wise decision to invest in rights issues of company belonging to an outperforming sector rather than struggling sector.

Image Source

  • Factors Determining Market Price Action Post Rights Issue: Shutterstock

Recommended Posts

About Editing Staff
At GetUpWise, we are a team of professional writers from different areas of subjects. We are conducting thorough research on each & every topic from highly reputed sources before writing any piece of article. Once research is done, we try our best efforts to provide informative piece of articles in an easy to understand manner. It is something that is extremely essential to meet our goal while reaching & offcourse building a strong online community. We do update our articles from time to time in order to provide the most latest information quickly. Thus, our articles can be used as a "way to gain smartness".

Leave a comment

Your email address will not be published.


*


*

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Get Instant Access To GetUpWise Posts

Subscribe Us

Loading

Please do verify your email address by clicking a link sent to your email.

More in Stocks & Mutual Funds
Limitations Or Drawbacks Of A Company’s Rights Issue
10 Limitations Or Drawbacks Of A Company’s Rights Issue

(2) Rights Issue Carries The Possibility Of Dilution Of Control It is one of the most unbeatable disadvantages of a...

Close