An explainer on Jio Financial Services Spin-off from Reliance in 10 simple points

Reliance Industries is all set to spin off Jio Financial Services, with Thursday, July 20, marked as the record date. Here's a simplified step-by-step breakdown of how this will unfold and its impact on Futures & Options (F&O) trades.

1. Scheme of Arrangement: Every Reliance Industries (RIL) shareholder will receive one share of Jio Financial Services (JFS) for each RIL share they hold as of the record date.
   
2. The Record Date: July 20, Thursday, is the record date that will determine shareholders' eligibility for receiving JFS shares.
   
3. Price Adjustment: Given that JFS is being carved out of RIL, there will be a corresponding adjustment in the share price of RIL.
   
4. Special Price Discovery Session: A special price discovery session for RIL will be held from 9 am to 10 am on Thursday, July 20.
   
5. Deciphering the Process: Let’s understand this with the help of an example. Suppose RIL shares close at Rs 1000 on Wednesday and trade at Rs 900 during the special session on Thursday, the spun-off entity, i.e. JFS, will be pegged at Rs 100 (1000-900).
   
6. Inclusion in Indices: JFS will be included in several indices, including Nifty 50, at Rs 100. Temporarily, this will expand the Nifty 50 to include 51 stocks.
   
7. The Waiting Game: The date of listing for JFS is not known yet. It will remain in the indices at the constant price of Rs 100 until it gets listed.
   
8. Post-Listing Adjustments: Once JFS shares are listed on the stock exchanges, the stock will be removed from the index three days after its listing, subject to certain price conditions.
   
9. Implications for F&O: It's important for RIL F&O contract holders to note that all existing contracts will expire a day prior to the record date, i.e., on Wednesday, July 19, as per current rules.
   Market Valuation of JFS: As for the anticipated value of JFS shares, market analysts project that the JFS share price could range between Rs 160-200/share.
10. Market Valuation of JFS: As for the anticipated value of JFS shares, market analysts project that the JFS share price could range between Rs 160-200/share.

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