An index consists of two companies having different market capitalisation. The market capitalisation of the first company is ₹ 100 crore while that of the second company is ₹ 50 crore. If the first company plans bonus is

Effect on the index due to corporate actions: Bonus Issue: In the case of a bonus issue, the market capitalisation of the company does not change. Only the number of shares in the formula is changed. Hence, there is no change in the index. The bonus issue increases the number of shares but reduces the share price proportionately, keeping the total market capitalization constant. Rights Issue: When a company included in the compilation of the index issues rights shares, the free-float market capitalization of the company is increased by the number of additional shares issued based on the ex-right price. A proportionate adjustment is then made to the Base Market Capitalization to ensure the index value remains unaffected by the rights issue itself, reflecting only market-driven price changes.