Jio Financial Services Set To Exit Sensex
Jio Financial Services Ltd (JFSL), a demerged non-banking financial services (NBFC) arm of Reliance Industries, is set to be excluded from all S&P BSE Indices, including the Sensex, effective from 1 September 2023, as confirmed by a notice from the BSE.
The decision by Asia Index to remove Jio Financial Services from the indices stems from its listing on 21 August 2023, following its separation from parent company Reliance Industries.
In recent trading sessions, the JFSL stock has not triggered the lower circuit limit. During the most recent session, the share price of Jio Financial Services on the BSE closed 0.41 per cent higher at Rs 233.65 per share. According to regulatory guidelines, JFSL is scheduled to be removed from the S&P BSE indices today. However, if the stock had hit the lower circuit limit on this day, the removal date of JFSL shares from the indices would have been extended.
After the shares encountered a lower circuit for four consecutive sessions following their listing, the stock exchanges extended the removal of JFSL shares from the indices on two occasions.
A notice from the BSE highlighted that JFSL did not reach the lower circuit on both 29 August 2023 and 30 August 2023. As per the announcement, if JFSL had hit the lower circuit on the third day, which was 31 August 2023, the removal from the S&P BSE Indices would have been postponed. The Index Committee established a 2 PM IST cut-off time for assessing the lower circuit limit to provide certainty to stakeholders. If the lower circuit was not hit before the cut-off time, JFSL would be removed from the S&P BSE Indices before trading commenced on 1 September 2023.
On 30 August, the share price of Jio Financial Services continued to rise for the second consecutive session. The shares were locked in a 5 per cent upper circuit at Rs 232.70 on the BSE. Similarly, on the NSE, JFSL shares hit the 5 per cent upper circuit limit at Rs 231.25 each, emerging as the top gainer on the Nifty.
Jio Financial Services was introduced on the stock exchanges on 21 August following its demerger from Reliance Industries, led by billionaire Mukesh Ambani, which operates in the oil-to-telecom conglomerate sector.
At the time of listing, the stock was priced at Rs 265 per share on the BSE and Rs 262 per share on the NSE, in comparison to its discovered price of Rs 261.85 per share. Since its listing, the stock has faced selling pressure from institutional investors.
Market analysts have differing opinions on the future of Jio Financial Services. Prashanth Tapse, Research Analyst and Senior Vice President of Research at Mehta Equities, describes the stock's initial lower circuit period as a result of selling pressure from funds and controlled volatility in the Trade-to-Trade (T2T) segment due to T2T segment rules.
Tapse anticipates reduced volatility post its Sensex removal, expecting demand and supply for Jio Financial Services shares to stabilize based on business events and performance indicators. He suggests that risk-tolerant traders might consider accumulating shares in two tranches up to the level of 218.
According to Mohit Gulati, CIO & Managing Partner of ITI Growth Opportunities Fund, Jio Financial will remain in the MSCI and FTSE indices, unaffected by the Sensex exclusion, thereby not impacting inflow or outflow. Gulati notes that as long as these indices maintain their inclusion, the Sensex removal will not significantly affect the stock. Additionally, if price limits are met, NIFTY will also retain JFSL in the index, making the Sensex exclusion an isolated event.
