A dividend moves value out of the company
A cash dividend distributes part of a company's resources to shareholders. If a company pays ₹5 per share, it sends out cash and retains less cash inside the business. The payment is therefore not an extra gain that can be considered independently of the value of the remaining share.
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Follow the cash on both sides
Suppose a company distributes ₹5 for every outstanding share. A shareholder receives cash, while the company loses the corresponding amount of cash from its assets.
In a simplified market with no other changes, a share trading at ₹100 before losing entitlement to that dividend would be expected to trade around ₹95 afterward. The holder has a share worth about ₹95 plus ₹5 of dividend cash, before taxes and other effects.
Actual prices need not move by exactly ₹5. News, trading activity and wider market movements happen at the same time.
The essential mechanism is the transfer. Evaluating a dividend separately from the company's remaining value counts the distributed cash without recognising that it has left the business.