Trading activity on the Tesco share price appears to be adjusting the price downwards after shareholders approved a special dividend payment of 5 billion pounds. This move follows the sale of its Thai and Malaysian operations last year. The dividend payment comes to 50.93p per share, which is about a fifth of the market capitalization of Tesco.
The shareholders are also proposing to consolidate the shareholding at a ratio of 15 shares for every 19 shares previously held to cushion the impact that the proposed dividend could have on the Tesco share price.
Tesco is down 1.6% as at the time of writing, following the selloff that ensued after the news became public.
Today’s steep selloff brings price in conflict with the support formed by the channel’s trend line. The intraday violation of this trendline to the south has put this support marker at risk. An extension of this violation brings 239.7 into the picture as additional support. A breakdown of this level targets 236.0, with 234.3 and 231.4 also in the running to become future downside targets.
On the flip side, a bounce from the channel’s trendline allows for a potential recovery towards the channel’s return line. However, this move needs to overcome price barriers at 244.8 and 250.4 for this move to be actualized.
