RIL-Jio Financial Demerger: Today we have brought an exciting news for you. The financial world is abuzz with the latest development from Reliance Industries – their financial arm, Jio Financial Services, is breaking free from its parent company and taking all the attention on its own. Yes, you heard right! Jio Financial is all set to spread its wings and fly high in the stock market.
What’s the Buzz All About?
So, you ask, what’s the big deal in this? Well, in October, mega-oil-to-retail giant, Reliance Industries made a big announcement. They were going to sell their financial services business and give it a new identity as Jio Financial Services Limited. This is part of their plan to meet the growing demand for modern financial services that cater to both retail customers and small businesses.
Jio Financial Takes the Stage
Today is that day, my friends! Jio is all set to make its grand debut on the financial stock exchanges – NSE and BSE. And you know what’s even more thrilling? It is going to be a part of some of the top tier indices like Nifty 50, Nifty 100 and the prestigious Sensex.
The Shareholders’ Windfall
Hold on tight, because this part really is a game-changer! If you are a shareholder in Reliance Industries, guess what? You are in for a treat! For every share you hold in RIL, you will be given one equity share of Jio Financial Services. It is like a special bonus, and you will have a stake in both the entities. Good deal, isn’t it?
Price Discovery – A Special Session
Now, you must be wondering how they will determine the price of Jio financial services. Well, the stock exchanges are hosting a special pre-opening trading session for RIL between 9 am and 10 am. This special session will help in ascertaining the adjusted share price of Reliance Industries after Jio Financial demerger.
Breaking It Down – Price Discovery Process
Let’s understand it with a simple example. Imagine that during the particular session, RIL was trading at ₹2,600, while its closing price on the previous day (Wednesday) was ₹2,800. Post-merger, Jio Financial Services will be a separate entity, and its stock price will be set at ₹200 (ie ₹2,800 – ₹2,600).
Jio Financial in the Indices
Now, let’s talk about indices, shall we? Jio Financial will join some of the biggest players in the stock market. It will join the prestigious Nifty 50 at a stable price of Rs. 200 per share. Yes that is correct! The Nifty 50 will temporarily have 51 stocks while Jio Financial will move into its new role. Isn’t it interesting?
The Why Behind the Pre-Open Session
In April, stock exchanges made some changes in the way they handle demergers. If unlisted entities conduct a special pre-open session, they will be retained in the index at a fixed price. This step ensures smooth transition and keeps the markets well informed.
What Drives the Opening Prices?
Now, you might be curious to know how they set the starting prices. Well, it all comes down to the principle of demand and supply. The stock exchange looks at the maximum quantity that can be executed and finds out the equilibrium price, which sets the opening price for RIL at 10 am. It’s a delicate dance between buyers and sellers!
Jio Financial’s Listing Journey
Once Jio Financial Services officially gets listed, it will remain part of the indices for three more days after its listing. After that, it’ll gracefully exit the indices, but only if certain price conditions are met. It’s like a whirlwind romance with the stock market, but all good things must come to an end.
Where Does Jio Financial Belong?
You might be wondering where Jio Financial will find its new home in the indices. Well, don’t you worry! BSE has already announced that Jio Financial will be cozying up in not one but 18 of the S&P BSE indices, including the highly-coveted S&P BSE Sensex.
As for NSE, Jio Financial will be making its mark in the Nifty 100, Nifty 200, and Nifty 500 indices, along with some other fantastic sectoral indices.
