Short answer: The adjusted closing price is the closing price of a stock, restated to account for corporate actions such as dividends, stock splits, and new share issues. Those events change the value of each share, so the adjusted price shows the effect of those changes on the historical price series. The ordinary closing price, by contrast, is not adjusted, so comparing past prices across such events can give a misleading picture.
Last reviewed: 8 November 2026
At a glance
| Term | What it means | Effect on the price record |
|---|---|---|
| Ordinary closing price | The price of the last trade before the market ends its session | Not adjusted for corporate events |
| Adjusted closing price | The closing price restated for corporate actions such as dividends, splits and new share issues | Removes distortions caused by those events |
| Corporate actions | Dividends, bonus shares, stock splits and rights issues | Change the share price |
| Rights issue | New shares offered to existing shareholders at a discount, which dilutes existing equity | Adjusted closing price is set lower than the pre-issue price |
Why are there two closing prices?
Every trading day ends with a closing price, which is simply the price of the last trade before the session (the trading day) ends. Financial websites and data providers usually show this figure alongside an adjusted version. The two numbers are the same on days when nothing has happened to the company’s shares, but they can differ sharply on earlier dates.
The ordinary closing price records what the stock actually traded at on that day. It does not change when the company later does something that alters the value of each share. That is why it is useful for checking what a price was at a given moment, but less useful for measuring long-run performance.
Why do corporate actions change the share price?
A corporate action is a decision by a company that affects its shareholders and their shares. Dividends, bonus shares, stock splits and rights issues are the common examples in India. Each one changes the price or the number of shares, and so changes the value of each share.
A dividend is a payment to shareholders out of the company’s profits. Once a stock goes ex-dividend, the price typically falls by roughly the amount paid, because the cash has left the company. A bonus issue gives existing shareholders extra shares free of charge, which spreads the same company value across more shares. A stock split divides existing shares into a larger number of shares, again lowering the price per share without changing the total value of the company.
If a data series ignores these events, a fall in price on a dividend date looks like a loss to the investor. The adjusted closing price removes that artificial drop from the record.
What happens in a rights issue?
A rights issue is an offer to existing shareholders to buy new shares in the company. The new shares are offered at a discount to the market price, and because more shares are issued, each existing share represents a smaller slice of the company. This is called dilution, meaning existing equity (the shareholders’ ownership stake) is spread across more shares.
Because of this, the price of the stock after a rights issue is adjusted to a level below the pre-issue price. The adjusted closing price therefore sits lower than the ordinary closing price recorded before the issue. Without the adjustment, the older price would look higher than it really was relative to today’s shares.
How does the adjustment work in a worked example?
The following is a hypothetical example, with every figure invented for illustration only. Suppose a stock closes at Rs 400 on a given day, and the next day it goes ex-dividend with a Rs 10 dividend per share. Taking the dividend out of the price gives an adjustment factor of (400 − 10) ÷ 400 = 0.975.
Applying that factor, the earlier close of Rs 400 is restated as 400 × 0.975 = Rs 390 in the adjusted series. The ordinary closing price stays at Rs 400. Someone looking only at the ordinary series would see a fall from Rs 400 to the new price, even though part of that fall was the Rs 10 paid out to shareholders. The adjusted series shows the price move without that payout distorting the comparison.
Real data providers use their own methods and schedules, so the figures you see on a given site may be calculated differently. The principle, however, is the same.
Why does it matter for measuring returns?
A return is the gain or loss an investor earns over a period, including price changes and any cash received. If a dividend is paid and the price drops by the same amount, the ordinary price series shows a loss that the investor did not actually experience, because they received the dividend in cash.
Adjusted closing prices remove distortions caused by corporate actions from historical price data. This lets you calculate the return that was actually earned from one date to another by comparing adjusted prices, rather than comparing raw prices that include the effect of events like dividends and splits. In this sense, the adjusted series is designed to give a clearer view of what happened to the investment, not just what the quoted price was.
Why does it matter for comparing stocks?
Comparisons are only fair when the numbers have been treated the same way. Suppose two stocks are compared over five years, and one has issued bonus shares while the other has not. Without adjustment, the stock that issued bonus shares will show a lower price, even if both have performed equally well for shareholders.
Adjusted closing prices allow fairer comparisons of performance between different stocks and against industry benchmarks. A benchmark is an index or reference series used to judge how a stock or fund has done relative to a group of similar companies. If the stocks in that group have all been adjusted for their corporate actions, the comparison reflects their underlying performance more closely.
What are the limits and catches?
The adjusted closing price is a historical measure. It is restated for past events, so it can change when new corporate actions occur, and a series you downloaded last year may not match one downloaded today. Always check the date on which the data was pulled.
The adjusted figure also does not predict anything. It describes past price movements after accounting for corporate events, and it says nothing about future prices. Using it to forecast returns requires further analysis, and the adjustment itself does not make that forecast reliable.
Finally, the ordinary closing price still has its uses. It records the price at which trades actually took place on a given day, which matters for checking records, reviewing trades and understanding what the market quoted at a particular time. Knowing which series you are looking at is the key step.
Frequently asked questions
Is the adjusted closing price the same as the closing price?
No. The ordinary closing price is the price of the last trade before the session ends, without any adjustment. The adjusted closing price restates that figure for corporate actions such as dividends, stock splits, and new share issues.
Why is the adjusted closing price sometimes lower than the price I saw earlier?
A rights issue dilutes existing equity and is offered at a discount, so the adjusted closing price is set lower than the pre-issue price. Adjustments for other corporate actions can also lower earlier prices in the historical series.
Does the adjusted closing price show what I actually earned?
It is designed to help. Adjusted closing prices remove distortions caused by corporate actions from historical price data, which lets investors measure the return they actually earned. They do not predict future returns.
Can I use adjusted closing prices to compare two stocks?
Yes, that is one of their main uses. Adjusted closing prices allow fairer comparisons of performance between different stocks and against industry benchmarks, because each series has been treated for corporate actions in the same way.
Sources and last check
Facts in this article were checked against the sources below on 8 November 2026. Rules and figures can change; check the primary source before acting.
- icicidirect.com (broker education)
- groww.in (broker education)
- dhan.co (broker education)
- upstox.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.