Mumbai, Dec. 27: Sebi and the two principal bourses ' Bombay Stock Exchange and the National Stock Exchange ' today decided to hold a special one-hour trading session ahead of market hours on January 18 to enable price discovery in the post-demerger rump Reliance stock.
The unprecedented session will be held without any circuit filters and with no calculation of the stock indices. The Reliance share is currently the top-weighted in all market indices, including the bellwether sensex, in which it has a weightage of 11.78 per cent. The figure is 9.04 per cent in NSE’s nifty.
Market pundits have been predicting that the rump Reliance stock will tumble sharply after the demerger; some fear a fall of Rs 200 from its close of Rs 866.75 today.
The session will kill two birds with one stone: it will enable price discovery in the share before the market opens and will partly stop indices from being roiled if the rump Reliance stock plummets.
The Rs 1,00,000-crore Reliance empire is being carved up between the Ambani brothers, Mukesh and Anil. The latter will gain control of four demerged entities that will be involved in telecommunications, coal-based energy, financial services and gas-based energy businesses.
While Reliance Industries has fixed January 25 as the record date for the scheme, the BSE and NSE have set January 18 to 24 as the no-delivery period.
Responding to worries among the investors and operators on the impact the demerger would have on RIL’s share price and indices in general, both exchanges today decided that there will be a special trading session on January 18, from 8 am to 9 am, when only RIL shares will be traded ' a first in recent market history.
The market will open for trading at 9.55 am. In a circular issued today, the exchanges said there will be no circuit filter during the special session. They added that the the volume-weighted average price of RIL during the session shall be used for adjustment to the base market capitalisation of indices.
RIL has a market capitalisation of more than Rs 1,20,000 crore. “This is a good move from exchanges. It will not only help attain price discovery, but will also see that the indices do not take a major hit. Of course, the market capitalisation of Reliance will come down, but the indices will be protected,” said an analyst.
In a circular issued late in the evening, the NSE said, “Since the four new corporate entities are not listed and traded, valuing the post-demerger price of RIL is not possible by exchanges. It is necessary to put in place a reasonable mechanism for the market to discover the price for the limited purpose of determining the opening level of indices, which will continue to include Reliance.