New Delhi2 hours ago
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Securities Exchange Board of India i.e. SEBI has issued a new guideline today (May 21) to deal with the impact on stocks due to rumors in the stock market. According to the guidelines, if there is a big change in the stock due to any unverified news or rumor, then the company will have to confirm that news within 24 hours.
The company will have to clarify its position on that news within the stipulated time. According to SEBI guidelines, if the rumor is confirmed within 24 hours, the stock will be considered ‘un-affected price’ under the rules.
‘Unaffected price’ is the level of a stock that it would have been in the absence of that news or rumor. This guideline will be applicable to the top 100 listed companies from June 1 and will be applicable to the next 150 companies till December 2024.
SEBI wants to prevent losses due to rumors
It has been seen many times that such news related to a company comes through some platform due to which sharp fluctuations are seen in its stock. However, later the companies reject that news.
Many times companies take too much time to clarify their position on rumours, due to which investors have to suffer losses. With the aim of preventing this, SEBI has issued this guideline.
SEBI gives green signal to new method for ranking based on market cap
Along with this, SEBI has also made many other announcements which include announcements related to ease of doing business for the companies in the queue for IPO. This includes changes in offer size, minimum promoter contribution and other things. Apart from this, SEBI has also given green signal to a new method for ranking based on market cap. Now instead of one day, ranking of companies will be given on the basis of average market price of 6 months.
What is market cap?
Market cap is the value of the total outstanding shares of any company, i.e. all those shares which are currently held by its shareholders. It is calculated by multiplying the total number of issued shares of the company by the stock price. Market cap is used to categorize the shares of companies.
Market Cap = (number of shares outstanding) x (price of shares)
How does market cap fluctuate?
It is clear from the market cap formula that it is calculated by multiplying the total number of issued shares of the company by the stock price. That means if the share price increases then the market cap will also increase and if the share price decreases then the market cap will also decrease.
How does market cap work?
Whether a company’s shares will yield profit or not is estimated by looking at many factors. One of these factors is market cap. Investors can find out how big a company is by looking at the market cap. The higher the market cap of the company, the safer it is considered to invest in it. Stock prices rise and fall according to demand and supply. Therefore, market cap is the publicly perceived value of that company.
