The National Stock Exchange (NSE) on Monday, July 17, said Reliance Industries Ltd's (RIL) demerged entity Jio Financial Services Ltd (JFSL) will be included in NSE indices effective from July 20, 2023.

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"NSE has announced special pre-open session to be conducted for Reliance Industries Limited (RELIANCE) in the capital market segment on July 20, 2023, on account of demerger of its financial services business into Reliance Strategic Investments Ltd (‘spun-off entity’ to be renamed as Jio Financial Services Ltd)," the stock exchange said in a circular.

The NSE will include Jio Financial Services in 19 indices, including Nifty50, Nifty100, Nifty200, Nifty500, Nifty50 Equal Weight, Nifty100 Equal Weight, Nifty500 Multicap 50:25:25, Nifty Commodities, Nifty Energy, Nifty Energy, Nifty India Manufacturing, Nifty Infrastructure, Nifty LargeMidcap 250, Nifty Low Volatility 50, Nifty Mobility, Nifty Oil & Gas, Nifty Total Market, Nifty100 ESG, Nifty100 Liquid 15 and Nifty100 Low Volatility 30.

For at least three days from July 20 onwards, there will be 51 stocks available for trading on the Nifty 50 as the demerged entity will be part of the index.

"In accordance with the index methodology, spun off entity (Jio Financial Services) shall be included in 19 indices effective from July 20, 2023," NSE Indices said.

Further, Jio Financial Services will be removed from these indices on the end of T+3 days whereas T is the day on which Jio Financial will get listed. This is in accordance with the new methodology of Nifty indices.

In April, NSE Indices Ltd revised the methodology of Nifty equity indices for handling corporate actions involving demergers. The move was expected to help in reducing churn in index constituents resulting from corporate action involving demergers.

Under the new methodology, the demerged company will be retained in the Nifty index if Special Pre Open Session (SPOS) is conducted by the exchange.

Additionally, the spun-off business would be included in the index at a constant price -- which is the difference between the demerged company's closing price on T-1 day and the price derived during SPOS on the ex-demerger date.

The spun-off business, which is the newly listed entity, would be removed from the index after the end of the day on the third day of its listing.

If in the first two days, the spun-off business hits the price band each day, then the exclusion date would be deferred by another three days. For two consecutive days, if the spun-off business does not hit the price band then it would be removed after the third trading day of such observation.

In case on the third day, the spun-off entity hits the price band, the exclusion of such stock would not be deferred. If SPOS is not conducted by the exchange, the demerged company would be removed from the index at the beginning of T-1 day by making a suitable replacement in case of indices with a fixed number of companies.

Before this methodology, the demerged company was excluded from the index, and the same was replaced with another eligible stock, soon after the equity shareholders approve of a scheme of arrangement for the demerger of a company.

In the first week of July, Reliance Industries said the National Company Law Tribunal has given its nod to the demerger of the company's financial services undertaking and its listing.

Reliance had previously announced plans to demerge its financial services undertaking into Reliance Strategic Investments Ltd (RSIL) and rename and list it as Jio Financial Services Ltd.

Shares of Reliance Industries Ltd ended at Rs 2,796.40, up by Rs 57.50, or 2.10 percent on the BSE.

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First Published:Jul 17, 2023 8:45 PM IST