Shares of Jio Financial Services (JFSL), a part of billionaire Mukesh Ambani-led Reliance Group, extended losing streak for the second session on Tuesday, hitting 5% lower circuit for the consecutive trading day due to surge in institutional selling. The shares of the demerged entity of Reliance Industries (RIL) have fallen 10% in two sessions after making flat debut on the domestic bourses on August 21.

Early today, JFSL shares opened lower and locked in the 5% lower circuit limit at ₹239.20 against the previous closing price of ₹251.75 on the BSE. In a similar trend, the NBFC stock touched a lower circuit limit of ₹236.45 on the NSE. On the volume front, a total of over 70 lakh shares changed hands over the counter, while the market capitalisation slipped to ₹1.51 lakh crore.

Despite the tepid start at bourses, Jio Financial has become India's second-largest non banking financial corporation (NBFC) in terms of market value after Bajaj Finance.

“JFSL’s valuation is based on expectations surrounding its future growth potential and its 6.1% stake that it owns in RIL. 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. Since the stock is in the 'T segment', institutional selling is dragging the price down," says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

JFSL shares were officially listed on the stock exchanges on August 21, after spending a month as a dummy stock following demerger from the parent. The stock was listed at ₹262 on the NSE and ₹265 on the BSE against its discovered price of ₹261.85 fixed at a special pre-open session conducted by the NSE on July 20.

The equity shares of Jio Financial were listed in ''T'' group securities and put into the “Trade to Trade” segment by the exchanges to prevent too much volatility and price manipulation. In this stock segment, shares are traded only on a delivery basis, which means that the delivery of the stock can't be taken on the same day and are not eligible for intraday trading. The stock will be in the trade-to-trade segment for the next 10 trading days. 

What is Trade to Trade stock segment?

Trade-to-trade stocks or T2T stocks refer to securities that are required to be delivered on the T+2 date. Investors can't trade these stocks intraday or with the Buy Today Sell Tomorrow method. Once you acquire T2T stocks, you can't sell them till the completion of the T+2 settlement. If you attempt to sell these stocks the same day or before their delivery into your demat account, your order will get rejected.

In the T2T segment, the circuit filters are fixed at +5% or -5% to avoid extreme volatility and price manipulation.

Santosh Meena, head of research at Swastika Investmart, says, “This strategic move aims to temper speculative activity by disallowing intraday trades in these stocks. Investors can buy for delivery; however, it is difficult to sell for delivery if the stock is hitting a lower circuit. As per the earlier circular, it should be out of Nifty on a T+3 basis, but there is a catch because the T+3 will be counted from the listing day provided stock doesn't hit the circuit; therefore, T+3 will be counted when the circuit opens.”

How to trade in T2T stocks?

Investors who are willing to buy a T2T stock are required to pay the entire amount and take 100% delivery of the stock.

For selling the stock, investors need to ensure they have the stock’s delivery in their demat account. If you don’t, you cannot sell the stock. Once you sell the shares, you cannot buy them back as intraday square-off is not permitted in T2T stocks.

This segment does not allow intraday square-off, which means investors must ensure delivery in the demat account and give it on the T+2 date. Without completion of the T+2 period, the shares will go directly into the auction and result in heavy losses for the investor and penalisation for the broker.

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