Why is Jio Financial Services Stock Falling? Details Inside!

Investors are closely monitoring the forthcoming RIL AGM scheduled for August 28, hopeful for significant announcements that could benefit Jio Financial Services

Jio Financial Services Limited has witnessed a consecutive two-day stretch of triggering lower circuit halts. The stock's trading journey on Wednesday commenced at Rs 227.25 per share, signifying a 5 percent decrease from the prior day's closing value of Rs 239.20 on the BSE. Throughout the trading day, the share price remained stagnant as there was a lack of interest from buyers in the market.

JFS, the financial subsidiary demerged from Reliance Industries Ltd, made its entry into BSE trading at Rs 265 per share, presenting a 1.2 percent premium over its designated price of Rs 261.85 set on July 21.

During its listing day, JFS boasted a market capitalization of Rs 1,68,362 crore; however, it now stands at Rs 1,44,378 crore. Industry experts indicate that the stock may undergo a phase of decline before showing signs of potential recovery.

Curious about the reasons behind this stock's continuous fall and successive triggers of lower circuit halts? The answer lies in the fact that Reliance Industries is part of major indices like Sensex and Nifty. Recent developments have caused index funds holding Reliance Industries shares in their portfolios to receive Jio Financial Services shares in a 1:1 ratio.

However, Jio Financial Services is currently not included in these indices. Consequently, to comply with regulations, index funds are mandated to divest from these shares, thus driving the ongoing selling pressure.

Due to regulatory obligations, index funds must execute divestment from this stock, thereby generating a selling imperative. Among the total of 14.5 crore shares slated for sale, an estimated 8.5 crore shares were reportedly offloaded by the previous day, accompanied by an additional 20 lakh shares sold today. According to Deepak Jasani, the head of retail research at HDFC Securities, this selling pressure 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.

For the subsequent 10 trading days, the stock will be positioned in the Trade-To-Trade (T2T) segment, permitting only delivery-based transactions, and prohibiting intraday trading. Furthermore, the stock will have a 5 percent circuit filter for the upcoming ten sessions. Following the conclusion of this circuit restriction period, investors will have the choice to retain or divest their holdings.

Disclaimer: This article is for informational purposes only and not investment advice.