Adjustments in F&O contracts of TECHM on account of extraordinary dividend 2026

F&O
1

The Board of Directors of Tech Mahindra Limited (TECHM) has declared a dividend of ₹36 per equity share, with the ex-dividend date being July 03, 2026.

SEBI has prescribed a framework for exchanges to adjust derivative contracts at the time of corporate actions. The exchange has published detailed guidelines on such adjustments. As per this framework, if a company declares a dividend that is equal to or more than 2% of the market value of the underlying security, it is treated as an extraordinary dividend, and the exchange carries out adjustments in the futures and options contracts of the stock.

Since the dividend declared by TECHM is above 2% of the market value of the security, the exchange has issued a circular on the adjustment of F&O contracts in TECHM on the ex-date, July 03, 2026.

Adjustment for future contracts:

All positions in futures contracts of TECHM will be marked-to-market on the last cum-dividend date, i.e. July 02, 2026, based on the daily settlement price of the respective futures contract. Subsequently, open positions will be carried forward at the daily settlement price less ₹36 (dividend amount) for the respective futures contract.

From July 03, 2026 (ex-dividend date), daily mark-to-market settlement of the futures contracts will continue as per normal procedures.

For example:

Assume you bought 1 lot (600 quantities) of TECHM July futures on July 02, 2026, at ₹1,457, and the daily settlement price at market close is ₹1,480, you would have made a mark-to-market profit of ₹23 per share.

On July 03, 2026, the previous day’s position will be carried forward at ₹1,444 (i.e. 1480 − 36). If the closing price on July 03, 2026, is ₹1,465, you’ll make a mark-to-market profit of ₹21 per share.

Adjustment for options contracts:

The full value of the dividend, i.e. ₹36, will be deducted from all the cum-dividend strike prices on the ex-dividend date. All positions in existing strike prices will continue to exist in the corresponding new adjusted strike prices.

For example:

The strike price of the ₹1,440 Call Option will be reduced to ₹1,404 on July 03, 2026, and the positions in the ₹1,440 Call Option will continue to exist in the ₹1,404 Call Option.

The lot size of the F&O contracts will not change.

Also, if you hold equity shares of TECHM in your Demat account as of July 03, 2026 (ex-date), you will be entitled to receive the dividend, which will be credited directly to your primary bank account within 30 to 45 days from the record date.

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2

Ex dividend date is 3rd july. Suppose 2nd july is not a holiday. Shall I get dividend if I buy shares in cash market CNC on 2nd july and sell on 3rd july?

3

Yes, you will qualify for corporate action benefits if you purchase shares before the exdate.

Also, you will still be eligible for corporate action benefits even if you sell the shares on the ex-date/record date.

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4

Person who purchases on ex date will be eligible for dividend. Person who sells on ex date will also be eligible. Doesn’t seem correct.

5

Thanks for revised reply

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6

Hi Mahesh, apologies for the previous response. If the ex-date for dividends is 3rd July, you will be eligible to receive dividends if you purchase shares on or before 2nd July. In your case, you will be eligible to receive dividends if you purchase it on 2nd July.

Also, you will still be eligible for dividends if you sell the shares on the ex-date.