Jio Financial Services: RIL shares to turn ex-date for demerger today

Shares of Reliance Industries Ltd (RIL) on Thursday will turn ex-date for demerger of financial services business. Today is also the record date for the same, meaning Reliance Strategic Investment Limited (to be named as Jio Financial Services) will allot one share of RSIL for every one Reliance Industries share to those RIL shareholders, whose names are recorded in the register of members or the depository as on today.

Since 6.1 per cent of treasury shares in RIL is being transferred to the demerged entity, the corporate event will impact Reliance Industries shares, which will be visible on the counter on Thursday morning.

Note that there would be a special pre-open session from 9 am to 10 am, during which RIL shareholders can only place, modify or cancel the orders. Jio Financial Services would also be added to Nifty (51 stocks to trade on index) at a constant price.

This constant price would be derived from the difference between Reliance Industries (the demerged company) closing price of Rs 2,853 on Wednesday and the price derived during special pre-open session (SPOS) today. For example, if the stock settled at Rs 2,703 in the special pre-open session, the value for JFS would be Rs 150.

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"This derived price of Jio Financial will be considered on a daily basis for Nifty index value computation until it gets listed on the bourses. Once Jio Financial shares get listed on exchanges, the stock will remain as the 51st stock in Nifty 50 index for three day.  This will help volatility to settle in and let investors adjust their portfolios,"  Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities

During the SPOS, Nifty value will be calculated using the most recently available price of 49 stocks, previous day’s closing price of RIL (50th security) and zero price of dummy symbol. After the closure of SPOS, discovered price and indicative price of dummy would be calculated simultaneously.

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The newly listed symbol would be a part of the index for a temporary period. As per NSE Indices methodology, the new symbol will be removed from the index after end of day (EOD) on third day of its listing. Jio Financial Services (JFS) will be listed on stock exchanges in the next 2-3 months and at expected price of Rs 150-Rs 190.

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Active and passive fund managers would ideally maintain JFS price at Rs 261.80 per  share until it starts trading. If supposedly JFS lists on August 21, the stock will compulsorily be deleted on August 24, Nuvama Institutional Equities said in a note.

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