On Monday, after the initial flare-up during the early hours of trading on the BSE, the scrip dipped and closed lower by almost Rs 380 to Rs 9,235 against its previous close of Rs 9,615.

According to an IT analyst, the market was looking at a "ratio of 1:5 or higher and the 1:2 split just did not match expectations." He, however, feels that a further split in a 12-month time-frame is not exactly ruled out. On Monday, the board of Infosys decided to seek shareholders approval for the stock-split at an extraordinary general meeting on December 29.

"It is customary in markets to split the stock to improve liquidity. The Securities and Exchange Board of India has given flexibility to companies to sub-divide the par value of shares to less than Rs 10 and the company has chosen this option to improve liquidity,"Infosys Technologies chairman and CEO NR Narayana Murthy said. The sub-division of every equity share from the par value of Rs 10 into two equity shares of par value Rs 5 each, was pursuant to Section 94 of the Companies Act, 1956.

Consequently, the company's American Depositary Shares (ADSs), listed on the Nasdaq National Market, would be split in the ratio of two-for-one. The ADS holders would get two ADS for every ADS held by them. The ratio of two ADSs to one underlying equity share remains unchanged. As of September 30, 1999, Infosys had 3,30,69,400 equity shares of par value Rs 10 each outstanding.

After the shareholders' approval, the outstanding shares would increase to 6,61,38,800 equity shares of par value Rs 5 each. Infosyshad 20,70,000 ADS outstanding as of September 30, 1999. Following the completion of the stock-split, the number would increase to 41,40,000 ADS.