NSE to hold special pre-open session for RIL on July 20 amid its demerger

The National Stock Exchange (NSE) will conduct a special pre-open session for Reliance Industries Ltd on July 20 on account of the demerger of its financial services business Reliance Strategic Investments Ltd.

The spun-off entity Reliance Strategic Investments Ltd (RSIL) will be renamed as Jio Financial Services (JFSL).

The demerged company can be retained in the Nifty index if the special session will be conducted by the exchange as per the new methodology.

Following the demerger, Reliance Industries would continue to be part of Nifty Indices.

Besides, the spun-off entity will be included in several Nifty indices, including Nifty 50, Nifty 100, Nifty 200, and Nifty 500 from July 20, NSE Indices said in a statement on Monday.

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 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.