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Why the Vulcan Energy (ASX:VUL) share price is in the spotlight this week

This lithium developer’s shares are on watch this week…
The post Why the Vulcan Energy (ASX:VUL) share price is in the spotlight this week appeared first on The Motley Fool Australia. –

The Vulcan Energy Resources Ltd (ASX: VUL) share price has come into the spotlight again this week.

Not that it ever really lost the spotlight.

With the lithium developer’s shares up 422% since the start of the year, it has been getting a lot of attention from investors.

Why is the Vulcan Energy share price in the spotlight this week?

The Vulcan Energy share price was given an additional boost this week when S&P Dow Jones Indices announced changes to the S&P/ASX Indices. These changes will be effective prior to the open of trading on 20 September and follow S&P Dow Jones Indices’ quarterly review.

According to the release, the lithium developer’s shares will be added to the S&P/ASX 300 Index (ASX: XKO) at the next rebalance.

It is one of 12 new additions to the index, along with fellow lithium explorer Liontown Resources Limited (ASX: LTR) and battery materials focused company Novonix Ltd (ASX: NVX).

Why is this good news for Vulcan Energy?

Being added to an index like the ASX 300 can be a big positive for a company’s shares.

This is for two reasons. The first is that index funds or ETFs that track the index will have to purchase shares. This buy-side pressure could give the Vulcan Energy share price an additional boost in the coming days and weeks.

Another reason is that many fund managers have strict investment mandates. This means they can only buy shares from certain indices.

This means that any fund managers that were restricted from buying shares outside the ASX 300, will now be able to consider Vulcan shares.

Though, with the Vulcan share price up so much since the start of the year, they may well wait for a pullback before considering an investment.

The post Why the Vulcan Energy (ASX:VUL) share price is in the spotlight this week appeared first on The Motley Fool Australia.

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More reading

Which ASX shares are set to finish the week as the top movers on the ASX 300?

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Why Charter Hall, IGO, Vulcan, & Z Energy shares are storming higher

Why the Vulcan Energy (ASX:VUL) share price is jumping 7% today
Why the Vulcan (ASX:VUL) share price is flying higher today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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