Jio Financial Services demerger: RIL special pre-open session kicks off; share price to reflect at 10 am

The special pre-open session for Reliance Industries Ltd (RIL) kicked off on Thursday, in the wake of the demerger of its financial services business into Reliance Strategic Investments (to be renamed as Jio Financial Services or JFS). Investors would be able to see the discovered price (opening price) for RIL (ex-financials) at 10 am.

During this special session, orders for Reliance Industries can be entered, modified or cancelled in the first 45 minutes. The order matching period will start immediately after completion of order collection period for the next 10 minutes. The order will be matched at a single (equilibrium) price which will be open price. Eligible buy limit orders will be matched with eligible sell limit orders. During order matching period order modification, order cancellation, trade modification and trade cancellation will not be allowed. With this, the opening price will be determined. The next five minutes will be a buffer period for the transition from pre-open to normal trading. The session would help find value for RIL (ex-financials).

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"Given a delayed trading in RIL, computation of Nifty50 index level will be based on 49 stocks during the pre-open session. After the closure of the special pre-open session, the discovered price of RIL and the indicative price of Jio Financial would be calculated simultaneously," said Devarsh Vakil, Deputy Head of Retail Research at HDFC securities.

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To recall, JFS would be added to Nifty (51 stocks to trade on index) today at a constant price. This constant price would be derived from the difference between Reliance Industries closing price of Rs 2,853 on Wednesday and price derived during special pre-open session (SPOS) today. For example, if the RIL stock settled at Rs 2,703 in the special pre-open session, the value for JFS would be Rs 150.

"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.

Active and passive fund managers would ideally maintain JFS price at Rs 261.80 per share until it starts trading. JFS shares will be dropped from all the NSE and BSE indices at the last traded price, which is effective at the open of JFS listing date, plus three business days. 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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