Jio Financial stock could see $290 million outflow from passive funds: Nuvama

economictimes.indiatimes.com:

Jio Financial Services, the demerged financial services business of Reliance Industries, will begin trading on the exchanges on Monday. Currently, Jio Financial is part of key indices of the BSE and National Stock Exchange, including the Sensex and Nifty 50, at a constant price of Rs 261.8 a share. This price was derived through a special pre-open session conducted by the exchanges on RIL stock on July 20.

However, Jio Financial was added to key indices for a temporary period, to help passive and active funds holding RIL stock to adjust their portfolio. Given the high foreign institutional holding in RIL, a smooth process for stock price adjustment was essential, while ensuring lesser volatility. Assuming the hypothetical price scenario for Jio Financial on its trading day + 3rd day of listing — the constant price of Rs 261.8 — passive investors tracking Nifty 50 could sell around 90 million shares, equivalent to $290 million, according to Nuvama Alternative & Quant Research.

Meanwhile, passive funds tracking Sensex could sell 55 million shares, equivalent to approximately $175 million. At the current free float, the brokerage is assuming weightages of less than 1% for Jio Financial in Nifty 50 and around 1% in Sensex. After trading commences on Monday, Jio Financial will be removed from Sensex, Nifty 50 and other indices after the close of trading on August 24 on Thursday at the market determined price, provided the stock does not hit the price band for two consecutive days.