RIL-Jio Financial Demerger: Today, Reliance Industries’ financial arm, Jio Financial Services, is set to become a separate entity listed separately on NSE and BSE. It will be included in Nifty 50, Nifty 100, Sensex, and other prominent indices. In October, the Oil-to-Retail conglomerate announced its decision to demerge its financial services business and list it as Jio Financial Services Limited on stock exchanges—a step to capitalize on the rising demand for new-age financial services among retail and small business customers.
Existing Reliance shareholders will receive one equity share of Jio Financial Services for every one share of RIL they hold.
Jio Financial Services Revealed: A Closer Look at the Financial Pioneer
Jio Financial Price Discovery:
Stock exchanges will host a special pre-opening trading session for RIL between 9:00 AM and 10:00 AM, determining the initial share price of Jio Financial Services, which will commence trading at 10:00 AM. This session will help establish the fair value of the demerged shares after Jio Financial Services’ separation. During this session, investors can place, modify, or cancel orders.
How Price Discovery Works?
To illustrate:
a) On Thursday, RIL was trading at ₹2,600.
b) And on Wednesday, RIL closed at ₹2,800.
c) Post demerger, Jio Financial Services’ separate listing price is fixed at ₹200 (2,800-2600).
Jio Financial will be added to benchmark indices, including Nifty 50, based on its rupee value—₹200 per share. This value will remain in the indices unless Jio Financial is officially listed as a separate entity. Consequently, there will be 51 stocks in Nifty 50, as explained by Pravesh Gaur, Senior Technical Analyst at Swastika Investmart.
Why the Special Pre-Open Session?
In April, stock exchanges revised the process of handling demergers. According to the new guidelines, if a special pre-open session is conducted by the exchange, the separated entities will be retained in the indices. The demerged business will be included in the index at a fixed indicative value for the day.
How Will Initial Prices Be Determined?
The highest order match during this session will set the opening price of the stock when regular trading resumes for Jio Financial Services at 10:00 AM.
” “The determination of the opening price hinges on the delicate interplay of market forces, where the dynamics of demand and supply harmoniously converge to set the initial valuation.”. The equilibrium price will be the price at which the maximum quantity is executable,” explains the NSE website.
Jio Financial’s listing will remove it from the indices, subject to certain price conditions, three days after the date of its listing. For example, if Jio Financial is listed on Day T, it will be removed from the index at the end of T+3 days.
Which Indices Will Include Jio Financial?
The demerged entity will be included in multiple NSE and BSE indices. BSE announced that Jio Financial will be included in 18 indices, including S&P BSE Sensex.
For NSE, Jio Financial will be part of Nifty 100, Nifty 200, Nifty 500, and other regional indices.
In conclusion, the demerger of Jio Financial Services is a pivotal milestone in Reliance Industries’ journey, opening doors to fresh growth prospects in the financial sector. The market is brimming with anticipation for the grand debut of Jio Financial Services, holding the promise of a groundbreaking revolution in the realm of financial offerings and experiences. The strategic separation empowers Reliance Industries to seize emerging opportunities and cater to evolving customer demands, reshaping the landscape of financial services. As the excitement builds, the financial community eagerly anticipates the transformation Jio Financial Services will bring, ushering in a new era of accessible, innovative, and customer-centric financial solutions.