Jio Financial shares rebound 10% after hitting 5% lower circuit for 5th day

After hitting lower circuits for the fifth straight session, shares of Jio Financial Services Limited (JFSL), the demerged entity of Reliance Industries, staged a strong comeback on Friday amid strong volume due to huge block deals. The JFSL shares turned positive for the first time since its listing on the stock exchanges on August 21, with 1.9 crore shares changing hands over the counter on the BSE against an average volume of 12.19 lakh stocks in multiple bunched trades. However, the names of buyers and sellers were not ascertained immediately.

Early today, JFSL shares opened lower and touched its 5% lower circuit limit of ₹205.15 on the BSE for the fifth consecutive day. However, the stock rebounded strongly and jumped as much as 10% from the day’s low to hit an intraday high of ₹225. The market capitalisation increased to ₹1.42 lakh crore.

On the NSE, the share price of JFSL opened at ₹202.80 against the previous closing price of ₹213.45. During the trade so far, the counter surged 10.5% from the intraday low to touch ₹224.10 levels.

At the current price level, the stock trades 19% lower than its record high level of ₹278.20 touched on its listing day, while it is down 14% from its discovered price of ₹261.8.

Meanwhile, investors are keeping a close eye on Reliance's 46th Annual General Meeting (AGM) to be held on August 28, expecting some announcements on the company's financial services business in the meeting. This will be the first AGM of RIL after listing of JFSL and investors are eagerly awaiting management commentary on value unlocking for shareholders and updates on the potential listing of retail, digital and O2C businesses.

JFSL, a part of billionaire Mukesh Ambani-led conglomerate, was listed on the BSE and the NSE on August 21 after spending a month as a dummy stock on the exchanges since July 20, following the demerger from the parent. This is the second-largest listed Non-Banking Financial Corporation (NBFC) in terms of market value after Bajaj Finance.

In order to prevent volatility and price manipulation, the stock has been placed in the ''T'' group securities and put into the “Trade to Trade” segment by the exchanges. The stock will be in the trade-to-trade segment for the next 10 trading days. 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 is not eligible for intraday trading.

JFSL shares have witnessed sharp volatility in the last five sessions amid sustained selling by institutional investors. According to analysts, the weakness in JFSL shares was driven by institutional selling, though the outlook for the country’s second-largest non-banking financial corporation (NBFC) firm remains positive.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says the volatility in JFSL was expected since institutional selling was on the cards and interested buying was also expected. “The volatility seen in the stock after listing justifies the decision to move the stock to the Trade to Trade segment. Investors who are optimistic about the stock can buy from the market for delivery without any restrictions," he says.

Kranthi Bathini, Director Research, WealthMills, says, “JFSL shares have been coming down in the past three sessions consecutively after listing at ₹265 levels. The fair value of this company works around ₹200 range and this stock has come to the investors from Reliance Industries, which is a widely held stock in terms of market capitalisation. That is the reason some kind of profit booking the stock has been witnessing in the past few sessions.”

“Investors with a long term perspective can hold onto the stock and the fresh entries are advised in the range of ₹200 levels which is a fair range for this stock at this point in time. But this is the stock to watch in the coming quarters because it is coming from the pedigree of Reliance industries and its focus on the financial sector,” Bathini adds.

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