Jio Financial, which was listed on the bourses on August 21, ended 5% lower at ₹239.20 on Tuesday.
“JFSL will now be removed from all the S&P BSE indices effective prior to the opening of trading on Tuesday, August 29, 2023. Should JFSL continue to hit the lower circuit in the next two days, the removal date will be deferred by another three days,” BSE said in a circular.
The market capitalisation of Jio Financial stood at ₹1.52 lakh crore on Tuesday, more than that of Tata Steel, Coal India, HDFC Life, and Bajaj Auto.
JFSL shares listed on Monday at ₹265 apiece against the stock exchange-derived price of ₹262. However, possible selling by passive funds resulted in the stock falling in the past two trading sessions.
Global index aggregator FTSE Russell dropped Jio Financial from the FTSE All-World index and other three global indices on Tuesday. Analysts say dropping the stock from benchmark indices could lead to an overall outflow of $450 million from passive funds.
Reliance Industries announced the demerger of its financial services business into Reliance Strategic Investments, which was renamed Jio Financial.This was the first time a spun-off entity was included in the indices after the NSE in April introduced new rules on the methodology of Nifty indices for handling corporate actions involving demergers.
Other than the benchmarks, JFSL was also included in other indices. The inclusion of the spun-off entity was aimed at reducing churn in index constituents resulting from demergers, which impacts passive funds. Until now, spun-off entities were excluded from indices soon after the scheme of arrangement for the demerger was approved, forcing passive funds to shuffle the weight of all index stocks.
The temporary inclusion into key indices including Sensex and Nifty allows passive and active funds to sell the specific stock on listing (Jio Financial in this case).