August 22, 2023
Jio Financial Services Limited (JFSL), the demerged financial arm of Reliance Industries, is experiencing a challenging start to its stock market journey as its share price dipped for the second consecutive session. The company, which made its stock market debut on August 21, saw its share price hit the 5% lower circuit for the second time in as many days.
Opening at ₹239.20 apiece on the BSE, a 5% decline from the previous closing price of ₹251.75, JFSL shares also registered a 5% decrease on the NSE, trading at ₹236.45 apiece. While the listing initially showed promise with shares debuting at ₹265 per share on the BSE and ₹262 per share on the NSE against the discovered price of ₹261.85 apiece, they soon encountered a lower circuit of ₹251.75 on the BSE and ₹248.90 on the NSE.
Selling by Passive Funds
The downward trajectory of JFSL shares is largely attributed to selling by passive funds tracking indices such as the Nifty and the Sensex. Analysts estimate that passive Nifty trackers may sell around 90 million shares worth approximately $290 million, while passive Sensex trackers could offload about 55 million shares worth roughly $175 million. This institutional selling is impacting the share price in the short term.
Despite the current challenges, analysts and experts remain optimistic about the future growth potential of JFSL. The company’s valuation is based on high expectations for its future growth potential and its ownership of a 6.1% stake in Reliance Industries Limited (RIL). With its extensive reach and connections with consumers and merchants, JFSL is well-positioned to scale up its business significantly.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained, “The future growth prospects of JFSL are indeed bright since it can scale up its business hugely with its enormous connection with consumers and merchants. But institutional selling is a drag on the share price in the near-term.”
It’s noteworthy that JFSL shares have been listed under the “Trade-for-Trade” segment for 10 trading days, allowing only delivery-based buying and selling within the T2T Group stock. After three days of listing, JFSL shares will be removed from all indices.
Following its listing, JFSL’s market capitalization stood at ₹1.58 lakh crore, making it the second-largest non-banking financial company (NBFC) in India, trailing only behind Bajaj Finance.
At 10:00 AM, JFSL shares were trading at ₹239.20 apiece on the BSE, reflecting a market capitalization of ₹1,51,970 crore. While the stock currently faces short-term challenges, the market remains watchful of its growth trajectory and the positive impact it could potentially bring to the financial landscape in the longer term.