Why was VEDL futures price didn't discount the dividend price before ex date

F&O
1

Vedl ex date is today(Sept 8 2021) for the dividend of 18.5… so ideally the futures should have have been trading at discount yesterday Sept 7 2021…

But VEDL September future closed at 312 level similar to spot price on September 7 2021… how can this be possible?
This is easy money Knowing this will open gap down by 18.5 rs… So I can easily short the future by Sept 7 and book profit on the Sept 8. VEDL futures opened gap down by 18.5 rs in both futures and spot.

Market will not give easy money as such. There should be some logic or catch in this? Can someone clarify or explain this?

2

Since dividends are more than 5 percent of CMP, even the ones holding future position will be eligible for dividend.
In zerodha this is what happens. Yesterday’s closing cmp will be considered as selling price of your existing position. New position will be taken after adjusting dividend amount.

So in case of vedl 312 will be considered as selling price of your existing future position. And a new potion wil be taken at 312-18.5. That is 293.5. So with this indirectly you are getting dividend. There is no scope for arbitrage.

5 Likes
3

Hi
I have a doubt .Iam holding VEDL shares in DMAT for sometime.
If I sell the share yesterday 7th sep at close,I wont get the divindend Ex dated 8th sep right?
If so I have to endure the correction, get the dividend & hope to sell on rise right?
About VEDL- CAIRN settlement $1 billion by govt of India may pass thro CAIRN INDIA which has been bought by VEDL some years ago. I saw in FLIPIT news. If govt’s repayment to Cairn benefits CAIRN INDIA (held by Vedanta ) Can we see more upside? (ir respective of Nifty metal index, spot aluminium,coper,Iron ore,steel prices?)

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4

Thanks for clarifying. So you mean to say if I have taken short position in VEDL futures yest EOD at 312 my entry price would have been automatically adjusted to 294 and my mtm will show 0 profit?

5

Yes. Thats right.

6

Nope, settlement is happening with Cairn UK (then promoter company of Cairn India) and not Cairn India (which is now owned by VEDL)
So payment will go to UK promoter entity and VEDL will have no material impact due to it.

1 Like
7

Thanks for clarification.
All metals except Aluminium & Coal are shivering in their boots due to China making heavy noises of output cut(China is talking down Iron ore to teach a lesson to Aussies)
Iron ore trading in SGX has collapsed & yet to go. Copper some what hanging by a thread.
NALCO,Hindalco & Vedanta have a mixed metal portofolio & have fared better in this metal complex melt down apocalypse since Aug 1st.
Massacre in NMDC,Hindustan Copper& Sail etc.
JSW& JIndal are falling somewhat more slowly.
Till china’s shake down stops & iron ore bounces - slow bleeding in metal comples may continue,(aluminium & coal are exception as of now)

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