Shares of Jio Financial Services (JFS) hit lower circuit limit for the fourth day in a row on Thursday. The stock has fallen 20% in four days, erasing about Rs 31,200 crore off its BSE market capitalisation (m-cap) since its listing on Monday. JFS was supposed to be excluded from stock indices from August 24, however the exclusion was deferred as the stock hit lower circuit in all sessions
While deferring the exclusion of JFS from stock indices by three days, the index committee of Asia Index Private Limited had said that should JFS continue to hit lower circuit on the next 2 days, the removal date will be deferred by another 3 days. On Thursday, Jio Financial shares were locked at Rs 213.45 on NSE, down 5%
"The selling pressure on the stock comes from institutions who have to exit from the stock before it is removed from the indices. Further weakness in the stock will open up opportunities for long-term retail investors to buy the stock. The stock will start trading in the rolling settlement from September onwards," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
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Jio Financial shares will be in the Trade-To-Trade (T2T) segment, and the stock will have a 5% circuit filter for the ten trading sessions. Under the T2T segment, stocks have to be bought only under the delivery method and are not eligible to be traded on an intraday basis. "JFS’ listing was somewhat subdued compared to market expectations of Rs 300 plus. Short-term selling pressure would continue looking at seller mood, which has increased multifolds in the last 3 days," said Prashanth Tapse, Research Analyst Sr VP Research, Mehta Equities
According to Deepak Jasani, Head of Retail Research, HDFC Securities, the selling pressure in Jio Financial is expected to persist for another span of two to three days. With the RIL AGM scheduled for August 28, investors and analysts are anticipating announcements regarding the strategic plans of this freshly listed entity. Expectations are high for substantial synergy benefits to arise from Jio's alignment with its parent company, as well as data-driven strategies that will define its trajectory
" Only after the RIL AGM on 28th August, 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 of the future outlook,” said Prashanth Tapse, Research Analyst Sr VP Research, Mehta Equities
"When a stock is expected to move to high volatility, it is put under trade-to-trade. The volatility in JFSL was expected since institutional selling was on the cards and interested buying too was expected. The volatility seen in the stock after listing justifies the decision to move the stock to the T segment. Investors who are optimistic about the stock can buy from the market for delivery without any restrictions," said VK Vijayakumar of Geojit Financial Services
"Financial services is a business with several established players. JFSL comes with a solid parentage, technology and financial backing. But it will still take its own time to set up businesses and make a dent on the competition. Investors shouldn’t expect miracles in the short to medium term. Only investors who have a horizon beyond 5 years can consider holding on to the stock," said Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities
Santosh Meena, Head of Research at Swastika Investmart said, "While the short-term outlook is uncertain due to a lack of clarity about business direction and profitability, the long-term outlook remains optimistic, supported by its robust pedigree and extensive network. The sector's bullish outlook further reinforces this perspective. Consequently, it's advisable for long-term investors to retain JFS shares, while short-term investors can stay away. Anticipate potential insights into JFS' future plans during the upcoming Reliance AGM."
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