Hello people,
The demerger of Reliance Industries {referred here-after as RIL} has finally taken place.The final price of Reliance Industries (details at http://economictimes.indiatimes.com/currentquote.cms?ticker=ril&ticker1=Searching&exchange=B&Submit=Go%20target= ) stock has been fixed at 714.90 after the special trading session that was conducted between 8-9 am today, taking it down by 23% from yesterday's close of 928.15 (which was 55.05 higher from Monday's close of 873.10).
To understand this better, following is what is going on...and what are the implications
1. Each RIL shareholder will get 5 shares for each share he holds in the ratio specified by the company.
In stock market terms, each RIL shareholder will get one share of Reliance Energy Ventures, Reliance Capital Ventures with a face value of Rs 10 each and Reliance Communication Ventures and Global Fuel Management Services with a face value of Rs 5 each.
Here, taking an example of a share purchased for Rs 890 to see how this has to be split.
The main Reliance share will have a cost price of 52per cent of the total which, in this case, works out to Rs 462.8. The share of Reliance Communication Ventures will be valued at Rs 344.4 (38.7per cent), Reliance Energy Ventures Rs 64.9 (7.3per cent), Reliance Capital Ventures and Reliance Natural Resources shares will cost Rs 11.5 (1.3per cent) and Rs 6.2 (0.7per cent), respectively.
2. This meant that whoever has a share of RIL is in profit. No doubt, as expected, the demerged share has been taken to trade at a lower price, but still the extra shares that one gets, put him still in profitable position. RIL has been seeing news in the stock markets taking the SENSEX to a swing, moving from high to low. Day before yesterday the stock went down to 873.10 and then yesterday to a high of 937.5 before closing at 928.15 (though market closed flat at +2.94). It made news by being the stock to be the traded in largest volumes.
Reason : Investors who bought a Reliance share on January 17 will be eligible for the four additional shares. This benefit wont extend to investors if they buy the share on January 18.
3. Tax Implication : Since the demerged share is expected to trade at a lower price, the question that many have is whether the resulting difference would be considered as a short-term capital loss.
Expectation : Market price of RIL to go even higher today.
Reason: The original shareholder would still get the shares of the holding company even if he sells his RIL share on or after 18th.
....................
Just wanted to share this great piece of news which is making waves everywhere and is surely going to affect the Indian economy.
For more news check Google news at :
http://news.google.com/news?hl=en&lr=&rls=GGLM%2CGGLM%3A2005-52%2CGGLM%3Aen&tab=nn&ie=UTF-8&q=RIL+demerger&btnG=Search+News
Articles used as input :
RIL demerger: What goes where {Times News Network} : http://economictimes.indiatimes.com/articleshow/1372297.cms
Buying RIL share: Know its tax implications {Times News Network} : http://economictimes.indiatimes.com/articleshow/1375858.cms
Regards
Kanuj
For more posts on finance, market, or tax please check the blogs :
My finance : http://financially-strong.blogspot.com/
My market : http://marketty-strong.blogspot.com/
My tax : http://taxably-strong.blogspot.com/
Disclaimer : This article contain personnal views expressed by the author with inputs from news articles and have no legal validation.
The demerger of Reliance Industries {referred here-after as RIL} has finally taken place.The final price of Reliance Industries (details at http://economictimes.indiatimes.com/currentquote.cms?ticker=ril&ticker1=Searching&exchange=B&Submit=Go%20target= ) stock has been fixed at 714.90 after the special trading session that was conducted between 8-9 am today, taking it down by 23% from yesterday's close of 928.15 (which was 55.05 higher from Monday's close of 873.10).
To understand this better, following is what is going on...and what are the implications
1. Each RIL shareholder will get 5 shares for each share he holds in the ratio specified by the company.
In stock market terms, each RIL shareholder will get one share of Reliance Energy Ventures, Reliance Capital Ventures with a face value of Rs 10 each and Reliance Communication Ventures and Global Fuel Management Services with a face value of Rs 5 each.
Here, taking an example of a share purchased for Rs 890 to see how this has to be split.
The main Reliance share will have a cost price of 52per cent of the total which, in this case, works out to Rs 462.8. The share of Reliance Communication Ventures will be valued at Rs 344.4 (38.7per cent), Reliance Energy Ventures Rs 64.9 (7.3per cent), Reliance Capital Ventures and Reliance Natural Resources shares will cost Rs 11.5 (1.3per cent) and Rs 6.2 (0.7per cent), respectively.
2. This meant that whoever has a share of RIL is in profit. No doubt, as expected, the demerged share has been taken to trade at a lower price, but still the extra shares that one gets, put him still in profitable position. RIL has been seeing news in the stock markets taking the SENSEX to a swing, moving from high to low. Day before yesterday the stock went down to 873.10 and then yesterday to a high of 937.5 before closing at 928.15 (though market closed flat at +2.94). It made news by being the stock to be the traded in largest volumes.
Reason : Investors who bought a Reliance share on January 17 will be eligible for the four additional shares. This benefit wont extend to investors if they buy the share on January 18.
3. Tax Implication : Since the demerged share is expected to trade at a lower price, the question that many have is whether the resulting difference would be considered as a short-term capital loss.
Expectation : Market price of RIL to go even higher today.
Reason: The original shareholder would still get the shares of the holding company even if he sells his RIL share on or after 18th.
....................
Just wanted to share this great piece of news which is making waves everywhere and is surely going to affect the Indian economy.
For more news check Google news at :
http://news.google.com/news?hl=en&lr=&rls=GGLM%2CGGLM%3A2005-52%2CGGLM%3Aen&tab=nn&ie=UTF-8&q=RIL+demerger&btnG=Search+News
Articles used as input :
RIL demerger: What goes where {Times News Network} : http://economictimes.indiatimes.com/articleshow/1372297.cms
Buying RIL share: Know its tax implications {Times News Network} : http://economictimes.indiatimes.com/articleshow/1375858.cms
Regards
Kanuj
For more posts on finance, market, or tax please check the blogs :
My finance : http://financially-strong.blogspot.com/
My market : http://marketty-strong.blogspot.com/
My tax : http://taxably-strong.blogspot.com/
Disclaimer : This article contain personnal views expressed by the author with inputs from news articles and have no legal validation.
