The stock decline resulted in Jio Financial’s market capitalisation falling to Rs 1.35 lakh crore from Rs 1.61 lakh crore on the listing day.
Concerns over elevated valuation coupled with selling by passive funds resulted in the stock decline during the listing week, according to analysts. Traders are speculating that Jio shares could rebound early next week amid the annual general meeting of parent Reliance Industries, scheduled on Monday.
“As expected, the fair value of the Jio Financial Services stock is likely around ‘200 apiece, based on 2x multiple to networth and 30% holdco discount, there seems to be some value buying by investors at these levels,” said Shreyansh Shah, research analyst, StoxBox. “In the upcoming AGM, which is scheduled for Monday, we believe some rub-off effect is seen on the stock’s price on optimism of some investor-friendly announcements.”
Many traders are still not active in the stock as it is still in the trade-to-trade segment with a 5% circuit for another five training sessions. In the trade-to-trade segment, shares cannot be bought and sold on the same day.
Both BSE and NSE have further deferred the exclusion of Jio Financial shares from the Sensex and Nifty by another three sessions since the stock has hit a lower circuit limit for two consecutive days.
JFS was supposed to be excluded from stock indices from August 23, which was later postponed to August 28. Now, it could be excluded on August 30. Analysts expect Nifty and Sensex passive funds to sell 15-16 crore Jio shares once excluded from both indices. So far, about 40 crore shares have changed hands on BSE and NSE since its listing.