DVR shares rallied 2-19% on Thursday after the Bombay Stock Exchange (BSE) announced rules for considering DVRs in indices, including Sensex, BSE 100, BSE 200 and BSE 500.
Tata Motors DVR (6.62%), Gujarat NRE Coke DVR (19.78%), Jain Irrigation DVR (5.49%) and Future Retail DVR (2.1%) were among the major gainers.
BSE in a notice on Wednesday said that the DVR will be eligible for inclusion in the index, if the company’s ordinary shares are also part of that index. While inclusion in the index will increase the number of stocks, it will not increase the number of the companies.
“This change will increase the number of stocks in a fixed count index; however the number of companies will remain fixed as detailed in the index methodology,” the exchange added.
The eligibility rules further add that DVR shares outstanding should be at least 10% of the total shares outstanding of the company. The DVRs will be analysed independently for inclusion if they meet the inclusion criteria for the respective index.
Pankaj Pandey, head of research at ICICI Securities feels that the development will popularise DVRs and this will reduce the pricing differential between a DVR and the ordinary shares, bringing the discount in-line with the global standards.