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Shares of Multi Commodity Exchange (MCX) are flashing an 80% fall from its last closing price on Friday, January 2. However, investors should note that this is not a real loss; in fact, the stock is trading on a positive note.

Since MCX shares have adjusted to the 1:5 stock split, with January 2 being the record date for the corporate action, each existing share has been split into five shares. Due to this, the MCX share price is automatically adjusted to one-fifth of the pre-split price.

As a result, some charts are reflecting an 80% fall from its last closing price of ₹10,989 on the NSE, but this is only a technical adjustment, not a real loss. Adjusted for the stock split, MCX's closing price for Thursday (January 1) is now ₹2,198.

When a company splits its stocks, the number of shares increases while the price per share reduces, keeping the total investment value and market capitalisation of the company unchanged.

In fact, from the adjusted closing price, MCX shares have jumped as much as 3.6% to the day's peak of ₹2,278.

MCX, on December 17, announced the record date for its 1:5 stock split as Friday, January 2, resulting in the sub-division of one share of a face value of ₹10 per share to five shares of face value of ₹2 each.

Recently, MCX shares bagged a rating and target price upgrade from global brokerage Morgan Stanley, as suggested by multiple media reports.

According to CNBC TV-18, the global brokerage has turned bullish on MCX shares, raising its target price to ₹11,135 from ₹6,710 earlier, and upgrading its rating to an ‘Equal weight.’ Mint could not independently verify this report.

More to come…

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