Jio Financial’s circuit limit revised to 20% from 5%; stock rises 26% in 5 sessions

Shares of Jio Financial Services (JFSL), a part of Mukesh Ambani-led Reliance Industries, continued gaining streak for the fifth straight session on Monday amid a slew of positive developments. The BSE has revised the circuit limit for JFSL to 20% from the earlier 5%, while the stock is expected to move out of the trade-for-trade segment this week. Last Friday, the newly listed stock was removed from the BSE Indices, including the benchmark Sensex.

The stock has been rising for the last five sessions and surged over 26% during the same period, after a weak debut on the domestic bourses on August 21. The JFSL shares touched 5% lower circuit limits in the first three straight sessions post listing, which forced stock exchanges to postpone the exclusion of the stock from key indices to August 29 from August 24. The exclusion of the stock was further delayed to September 1, after it hit lower circuit in intraday trade. JFS was initially slated to be removed from all indices on August 24, three days (T+3) after its listing.

Early today, Jio Financial shares opened at ₹254, up 3.5% against the previous closing price of ₹245.30 on the BSE. In the first two hours of trade so far, the NBFC stock gained as much as 8.8% to ₹267, while the market capitalisation climbed to ₹1.67 lakh crore. It touched an all-time high of ₹278.20 on its listing, while it touched record low of ₹205.15 on August 25.

What fuelled rally in JFSL shares?

JFSL shares gained buying momentum after Mukesh Ambani, chairman and managing director of RIL, announced that the company will soon enter India’s insurance segment. In the recently concluded 46th AGM of RIL, Ambani said, “JFSL will enter the insurance segment to offer simple, yet smart, Life, General, and Health insurance products through a seamless digital interface, potentially partnering with global players. It will use predictive data analytics to co-create contextual products with partners and cater to customer requirements in a truly unique way.”

According to Ambani, Jio Financial will consolidate the payments infrastructure to further drive digital payments adoption in India. “JFSL products will not just compete with current industry benchmarks but also explore path-breaking features such as blockchain-based platforms and CBDC. They will adhere to the highest standards of security, and regulatory norms and ensure protection of customer transaction data at all times.”

JFSL to move out of Trade to Trade segment

After spending a month as a dummy stock following demerger from the parent, RIL, JFSL shares were listed on bourses on August 21 and put into the “Trade to Trade” segment by the exchanges to prevent too much volatility and price manipulation. The exchanges had said that Jio Financial would trade in this segment for the first ten trading days till September 4. The market experts believe that JFSL will be removed from the Trade to Trade segment this week.

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 are not eligible for intraday trading.

Trade-to-trade stocks or T2T stocks refer to securities that are required to be delivered on the T+2 date. Investors can't trade these stocks intraday or with the Buy Today Sell Tomorrow method. Once you acquire T2T stocks, you can't sell them till the completion of the T+2 settlement. If you attempt to sell these stocks the same day or before their delivery into your demat account, your order will get rejected.

In the T2T segment, the circuit filters are fixed at +5% or -5% to avoid extreme volatility and price manipulation.

DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.