“JFSL has not hit the lower circuit on Tuesday, August 29, 2023 , and Wednesday, August 30, 2023,” said a BSE circular on Thursday. “….should JFSL hit lower circuit on the 3rd day i.e., Thursday, August 31, 2023 the removal of JFSL from all the S&P BSE indices will be postponed.”
“If JFSL does not hit the lower circuit before the cut-off time, the company will be dropped from all the S&P BSE Indices effective prior to the open of trading on Friday, September 1, 2023.”
Jio shares rose 0.4% to ₹233.6 on Thursday, paving the way for its exclusion from the Sensex.
Both BSE and NSE last week had further deferred the exclusion of Jio Financial shares from Sensex and Nifty to this week after the stock hit failed to meet the criteria of not hitting the lowest tradable limit for three straight days following its listing on the bourses on August 21.
JFS was supposed to be excluded from stock indices from August 23, which was later postponed to August 28.
“Its a breath of relief for Sensex passive trackers as JIO’s exclusion has finally occurred,” said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research. “In the final thirty minutes of trading, a total volume of around 64 million shares was observed, largely attributed to Sensex passive sellers.”Pagaria expects the NSE to exclude Jio Financial from the Nifty next week.
“If there’s no price band hit on September 01 (Friday) and September 04 (Monday), exclusion takes place on September 05 (Tuesday),” he said. “The stock exits Trade to Trade (T to T Segment) on September 04, likely facilitating the smooth exclusion next week.” The outflow on account of the Nifty inclusion will amount to approximately 110 million shares, he said.
This was the first time a spun-off entity was temporarily included in the indices after the NSE in April introduced new rules on the methodology of Nifty indices for handling corporate actions involving demergers. Till 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 inclusion of the spun-off entity in the indices was aimed at reducing churn in index constituents resulting from demergers, which impacts passive funds.
The inclusion into key indices including Sensex and Nifty allows passive and active funds to sell the stock on listing.