Jio Financial Services extends 5-day rally as Nifty expulsion looms
The share price of Jio Financial Services Ltd. (JFSL) surged for the fifth consecutive day on Monday and surpassed its listing price. The share price surged as much as Rs. 267 on the BSE, surging 8.84% from the previous trading session's closing. JFSL made its stock exchange debut on August 21, with a listing price of Rs. 265 per share on the BSE.
JFSL faces potential exclusion from the NSE indices
Due to changes in circuit filter limits, JFSL, the separated division of Reliance Industries, may be removed from NSE indices, including Nifty, this week. This adjustment could result in index funds selling an additional 110 million shares, which might affect the stock's performance, according to Nuvama Alternative & Quantitative Research. The stock exchanges earlier on Saturday increased the price band for JFSL shares to 20% from 5%.
JFSL was removed from Sensex on September 1
A circuit filter mechanism is used by stock exchanges to control excessive volatility in a scrip. It sets the maximum fluctuation allowed in a stock in a day. Analysts predict that JFSL shares may not reach the 20% circuit filter threshold. Therefore, the removal of JFSL shares from NSE indices seems likely this week. JFSL was removed from BSE indices, including Sensex on September 1.
Why was JFSL initially added to key indices?
Under the new index rules, JFSL was added temporarily to key indices so as to allow passive index funds to trade the shares they received due to the demerger. This temporary inclusion was aimed to reduce the volatility in Reliance Industries shares resulting from the demerger. Veteran banker KV Kamath has been appointed as the chairperson of JFSL. The company has a "digital-first architecture" and boasts a capitalization of Rs. 1.2 lakh crore.
