Jio Financial Services’ temporary inclusion in Nifty 50 and special pre-open for RIL stock: How it will work

financialexpress.com:

Reliance Industries Ltd’s demerged entity Jio Financial Services will temporarily enter the blue-chip indices NSE Nifty 50 and BSE Sensex on 20 July. NSE will conduct a special pre-open auction session for the Mukesh Ambani-led RIL stock, following the financial services arm spin-off, to determine RIL stock price without the demerged unit. Jio Financial Services will also join 18 other NSE indices such Nifty 100, Nifty 200, Nifty 500, Nifty Energy, and Nifty Oil & Gas until it is listed on the bourses for trading.

A pre-open call auction for Reliance Industries will be conducted for price discovery following the demerger. This pre-open auction will be conducted from 9 to 10 am on 20 July, following which “all the unmatched orders of the pre-open call auction session within the dynamic price band of the discovered price shall be moved to the normal trading session at their limit price.”

The pre-open session will allow traders to discover the street’s price for Reliance Industries, once JFS has been separated from the flagship company. The difference between RIL’s pre-demerger price and the pre-open session discovery price will be considered as the Jio Financial Services’ stock price. For example, if RIL’s share price settled at Rs 2,000 apiece on 19 July, and ends at Rs 1,800 during the pre-open auction session the next day, then JFS shares will be valued at Rs 200 apiece.

Before it is listed, a dummy ticker for JFS will be created, which will be added to the indices. The company will remain on the indices until it gets listed. Once the firm has been officially listed, JFS will trade on these indices for three days before it exits, at the price determined by the markets. This temporary inclusion will allow traders to