Jio Financial Services (JFS) has witnessed a continued decline, falling by 1.7% on Friday, marking its fifth consecutive session of losses since its listing on August 21. The stock closed at Rs 212.25, almost 20% lower than its listing price of Rs 265, after hitting the lower tradable limit for four consecutive days leading up to Thursday.
This decline has caused Jio Financial's market capitalization to drop from Rs 1.61 lakh crore on the listing day to Rs 1.35 lakh crore.
Analysts attribute the decline to concerns about the company's elevated valuation and selling by passive funds during the listing week. However, some traders speculate that Jio shares might experience a rebound early next week, particularly during the annual general meeting of its parent company, Reliance Industries, scheduled for Monday.
According to Shreyansh Shah, a research analyst at StoxBox, the fair value of Jio Financial Services stock might be around Rs 200, based on a 2x multiple to net worth and a 30% holdco discount. Some investors seem to be considering value buying at these levels, and optimism is building around potential investor-friendly announcements during the upcoming AGM.
It's worth noting that the stock is still within the trade-to-trade segment, where a 5% circuit limit applies, preventing shares from being bought and sold on the same day. Both BSE and NSE have extended the exclusion of JFS shares from the Sensex and Nifty by an additional three sessions due to the consecutive lower circuit hits.
Originally slated for exclusion from stock indices on August 23, the date was later postponed to August 28, and now it might occur on August 30. Analysts predict that Nifty and Sensex passive funds could sell around 15-16 crore Jio shares once the stock is excluded from both indices. So far, around 40 crore shares have been traded on BSE and NSE since its listing.
