Why Jio Financial Services shares hit lower circuit on stock market debut - IndiaTimes

NEW DELHI: The shares of Jio Financial Services (JFS) stumbled as soon as they hit the stock markets on their Monday debut, declining by nearly 5%.
On the BSE, shares of the company opened at Rs 265, up 1.20 per cent against Rs 261.85, the price fixed at a special price discovery session held last month.
However, the stock later fell by 3.85 per cent to hit Rs 251.75 — its lower circuit limit — against Rs 261.85.
On NSE, the shares of the company were listed at Rs 262 but later declined 4.94 per cent to Rs 248.90 — its lower circuit limit.
Post the stock market debut, the company's valuation stood at Rs 1.58 trillion ($19 billion), making it the third-largest non-banking financial company (NBFC) in India behind Bajaj Finance (Rs 4.15 trillion) and Bajaj Finserv (Rs 2.32 trillion).
Exit from indices
The newly-listed entity would be removed from the indices after the end of the day on the third day of its listing.
According to Bloomberg, the likely exclusion from the indexes led to the the selling pressure on Jio Financial.
This is because JFS is a newly listed stock and the indices have rules in place to prevent newly listed stocks from being included.
Nuvama Wealth Management analyst Abhilash Pagaria estimated selling of as much as $465 million by passive funds.
The entity, backed by billionaire Mukesh Ambani, was demerged from Reliance Industries last month.
The road ahead
Despite the selling pressure, experts anticipate that Jio Financial could benefit from Reliance's extensive presence in digital and retail businesses, potentially positioning itself as one of India's prominent non-banking finance companies.
JFS has access to the vast trove of data from Reliance's businesses which will give it a leg up in lending.
The company currently holds a 6.1% stake in Reliance and has established a strategic partnership with BlackRock Inc to establish an Indian asset management venture.
According to Reuters, JFS' non-executive chairman KV Kamath, a veteran banker and former chairman of ICICI Bank, said the company intends to be a "full-service financial services player".
In July, Hitesh Kumar Sethia was appointed as the chief executive officer, and Isha Ambani, the daughter of Mukesh Ambani, joined as a non-executive director.
As part of the demerger, Reliance Industries shareholders received one JFS share for every Reliance share.
(With inputs from agencies)

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Why Jio Financial Services shares hit lower circuit on stock market debut - IndiaTimes
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