The demerged financial arm of Reliance Industries Limited, Jio Financial Services Limited (JFSL), saw a 5% decline in its stock price on Thursday, hitting the lower circuit for the fourth straight trading day.
As a result, the value of JFSL shares has decreased by 20% since they first appeared on important benchmark market indices. Additionally, the company's market value has decreased to Rs. 1.36 lakh crore.
Why are shares of Jio Financial Services declining?
Market analysts blame increased selling by index funds for JFSL's stock market downturn.
The share price of JFSL has been hitting the lower circuit, according to Manish Chowdhury, Head of Research at StoxBox, who told IndiaToday. a day ago, as a result of passive funds selling shares in a bid.
"Since the removal date from major indices has been postponed by three days, we anticipate selling pressure to persist for a few more trading sessions and won't be surprised to see the share price fall below Rs. 200 per share levels," he continued.
Jio Financial Services Limited shares have been declining, according to Deepak Shenoy, CEO of Capitalmind, who stated this on X (previously Twitter), saying that index funds "want to sell it." In his post, he referred to this as "forced selling".
Why is JIOFIN falling, you ask? Because these index funds intend to sell it, they must have sold their holdings by the time it leaves the lower circuit and leaves the index, according to Shenoy.
Market analysts have recommended traders and investors in this situation hold off until Jio Financial's business plan and main areas of focus are more clearly defined.
"We advise investors to treat the company as a new age business and wait for clarity on their strategy and key focus areas," said Chowdhury of Stoxbox.
"Even though the company has a sizable market opportunity and is part of India's largest business conglomerate, which has a history of disrupting industries, it would be prudent to be on the sidelines to see the business execution on the ground," he continued.Â
