Jio Financial shares rebounds 10% after hitting lower circuit for 5th day

Shares of Jio Financial Services (JFS) found some buyers on Friday, after hitting lower circuit for straight five sessions since listing. The stock was locked in the seller's circuit on Friday as well but took a U-turn as investors made bids to buy the demerged entity of Reliance Industries (RIL).

On Friday, shares of Jio Financial Services hit lows at Rs 205.15 post hitting the lower circuit. However, the stock rebounded about 10 per cent to Rs 224.80 during the session, with a total market capitalization of more than Rs 1.4 lakh crore. However, the stock rose more than 4 per cent from its previous close at Rs 215.90 on Thursday.

Shares of Jio Financial Services were listed on the bourses at Rs 265 apiece on Monday, August 21. The stock has corrected about 23 per cent in five days, before finding some buyers. Investors are now keenly awaiting the annual general meeting of Reliance Industries, scheduled on Monday, August 28.

Earlier this week, the index committee of Asia Index Private Limited deferred the exclusion of JFS from stock indices by three days as the stock continued to hit lower circuit for two days and the removal date was deferred by another 3 days. The sell-off was majorly triggered by the passive funds, who were slated to exit the counter.

"Additionally, should JFS not hit the lower circuit limit on either of the next 2 days, but hits the lower circuit limit on the 3rd day, the removal of JFS from all the S&P BSE Indices will be deferred by another 3 days. Any postponement of a removal will be communicated as soon as possible; any changes to this approach would be announced via the standard channels," Asia Index Private Limited said.

At exclusion, Nifty index passive trackers could sell around 9 crore shares, which is equivalent to approximately $290 million. Alongside Sensex index trackers could sell 5.5 crore shares, which is equivalent to $175 million, Nuvama Institutional Equities said this week.

The stock of Jio Financial has been listed in the T-group segment of the bourses for the initial ten days of the listing. This means that intraday trading won’t be possible in the stock and there will be a circuit limit of only 5 per cent for both buyers and sellers. This will restrict any major moves in the stock.

JFS’ listing was somewhat subdued compared to market expectations of more than Rs 300. Short-term selling pressure would continue looking at seller mood, which has increased multifolds in the last 3 days," said Prashanth Tapse, Research Analyst- Senior VP Research at Mehta Equities.

"Only after the RIL AGM on August 28, we can expect some development in the JFS’ business plan. We stand neutral on the counter and wait for the AGM development, which can give a clear picture on the future outlook,” Tapse said.


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