Jio Financial Services (JFSL), the separated financial unit of Reliance Industries, encountered its second consecutive day of reaching the lower circuit due to continuous passive fund selling.
Jio Financial Services is now set to be excluded from all relevant exchange indices starting August 28, rather than the previously planned August 23. The Index Committee decided to delay the removal due to the stock hitting the lower circuit limit for two days in a row. This information was conveyed through a notice posted by the BSE.
The company’s shares were locked at ₹236.45 on the NSE after declining by 5%, and on the BSE, the stock closed at ₹239.2 per share.
In this podcast episode, Nabodita Ganguly discusses the recent decline in the shares of Jio Financial Services Limited (JFSL) with K S Badri Narayanan, Market Editor.
The decline is attributed to index fund selling due to SEBI’s norm that index funds should only invest in stocks as part of the index. JFSL was removed from the index, causing liquidity and NAV volatility for mutual funds.
Narayanan explains that JFSL will be reintroduced in the index, alleviating the selling pressure. He suggests that long-term investors need not worry, while short-term investors can buy during dips and sell after recovery.
The impact on the market is expected to be minimal. Narayanan also talks about LIC’s stake in JFSL and its inclusion in various indices, highlighting the prospect of JFSL’s growth in the NBFC sector. The discussion sheds light on JFSL’s market entry, its recent fall, and the factors shaping its future.