Jio Financial Services (JFSL) has been demerged from Reliance industries and the discovered price has come in at Rs 261.8 per share of the demerged business. So, it makes senses to see how does this impact fund flows, especially index funds?
Live TV
Loading...
Nuvama alternative research says active and passive fund managers would ideally maintain JFSL price at Rs 261.8 per share until it starts trading. This price is calculated after special price discovery session that was held for Reliance Industries on July 20.
The quantum of outflow on day of listing of JSFL by passive funds
There is no concrete listing day yet and it may take few weeks’ time to get all the listing approvals. But Nuvama expects that JFSL may be listed in a month’s time (or even earlier). Nuvama assumes on the day of listing (T-day), the action begins as Nifty 50 Index passive trackers will sell approximately 90 million shares, with a value of around $290 million.
Simultaneously, Sensex Index trackers are expected to sell 55 million shares, amounting to approximately $175 million. At the current free float they are assuming weightages of less than 1 percent in Nifty 50 and around 1 percent in Sensex.
Do passive fund managers need to make any transactions today?
They will not have to do any buying or selling in JFSL on Thursday i.e. today. The end of the day index weightages file will automatically get adjusted to the free float market-cap of existing constituents plus JIO Financials.
There will be actual buying or selling amongst other member constituents once Jio Financials starts trading and get excluded on trading plus third day.
So, what does this mean for index funds?
As JFS gets excluded from the indices, there will be some reshuffling in the weightings of other member constituents. Specifically, Reliance Industries' weight in the Nifty 50 Index is projected to move to around 10.1 percent from the previous 11 percent, while in the Sensex, it will shift to approximately 11.8 percent from 12.8 percent on July 19. This reallocation could result in actual buying or selling activities among the other index constituents.
(Edited by : Anshul)
First Published: Jul 20, 2023 1:33 PM IST
Note To Readers
Disclaimer: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Two days left for filing nomination, Congress undecided on candidates for Amethi and Rae Bareli seats
May 2, 2024 7:32 AM
Lok Sabha polls: Polling time in Telangana increased by an hour, here's why
May 2, 2024 6:55 AM