Why does my average stock price decrease after receiving bonus shares or a stock split?

When companies issue bonus shares, you receive them in your demat account at no cost. While you now own more shares, your total invested amount stays the same. This leads to a lower average cost per share.

Similarly, in a stock split, you get more shares as the face value per share decreases proportionally. Your total investment remains unchanged, but the price adjusts accordingly, reducing your average buy price.

For both bonus issues and stock splits, the adjusted price takes effect from the ex-date.