Investors clobbered Jio Financial Services Ltd (JFSL) for the second consecutive trading session with the stock tumbling 5 per cent to get locked at the lower circuit filter.
The stock declined 4.99 per cent to close at Rs 239.20 on the BSE — in what appears to be a dreadful start for the new Reliance group entity, the first listing from the Mukesh Ambani stable in over two decades.
A similar trend was visible on the NSE where it opened 5 per cent lower at Rs 236.45 and remained stuck at that level till close.
The trend indicated the abundance of sellers which market circles said were largely index or passive funds.
At the close, JFSL commanded a market valuation of Rs 1.51 lakh crore compared with Rs 1.59 lakh crore on Monday, a fall of Rs 7,973 crore in absolute terms.
With JFSL hitting the lower circuit filter for the second consecutive day, the bourses have decided to let the scrip continue in the benchmark indices for three more days.
Since JFSL is a demerged company from Reliance Industries Ltd, which is part of benchmark indices, it was made a part of the Sensex and Nifty to limit volatility. However, it is traded in the trade-for-trade segment where only delivery transactions are allowed.
Asia Index Private Ltd, a 50-50 venture between S&P Dow Jones Indices LLC and BSE Ltd, said it has decided to postpone the removal of JFSL by another three days.
JFSL will now be removed from all the S&P BSE indices effective prior to the opening of trading on Tuesday, August 29, 2023, it added.
Earlier, the stock was scheduled to be removed from the indices on August 24.
“Should JFSL continue to hit the lower circuit on the next two days, the removal date will be deferred by another three days,” the notice said.
If JFSL does not hit the lower circuit limit in either of the next two days but hit the lower circuit limit on the third day, the removal from the indices will be deferred by another three days.
Observers said that since JFSL will be removed from the Sensex and the Nifty in the near future, passive funds who track these indices are selling the stock.
“JFSL will be entering four businesses-retail lending, AMC, insurance (life, non-life and broking), and digital payments. We estimate JFSL’s lendable net worth to be $2.7 billion, and expect it to initially target consumer durable, unsecured personal loans and small ticket merchant loans,” a note from IIFL Securities said.
Meanwhile, Life Insurance Corporation (LIC) said it has acquired 6.66 per cent stake in JFSL.
“Corporation has acquired 6.660 per cent shareholding in JFSL through demerger action by RIL,” LIC said in a regulatory filing.
