Jio Financial shares rally 8% after circuit limit revision; stock trades above listing price

On a day, the circuit limit for Jio Financial Services (JFS) was raised to 20 per cent from 5 per cent earlier by BSE, the stock climbed nearly 9 per cent to move past its listing price of Rs 265. By 11.15 am, the scrip hit a high of Rs 267. It was later trading at Rs 262.50, up 7.01 per cent.

Jio Financial was listed on August 21 at a 1.18 per cent premium over its discovered price of Rs 261.85 apiece on July 20. BSE has increased the price band for the stock to 20 per cent from 5 per cent earlier. With this revision in circuit limit for JFS, it is expected that the demerged financial services arm of Reliance Industries would eventually be excluded from NSE indices including Nifty this week. The stock was removed from Sensex and other BSE indices last week.

For a spun off entity to be excluded from NSE indices, it must have two consecutive days without any circuit limits or price band, upper or lower. Expect no communication from the exchange until then, the brokerage said in a note.

"With that sturdy 20 per cent filter, chances of JFS hitting upper/lower circuits are about as rare as spotting a comet. So, there is a very good chance Jio makes its exit from Nifty indices in this week. If JFS doesn't reach its limits (20 per cent) on Monday (September 4) and Tuesday (September 5), consider Wednesday (September 6) its official exclusion day (when Nifty passive trackers will sell in last 30 minutes of trade)," Abhilash Pagaria - Nuvama Institutional Equities.

As per Nuvama Alternative & Quantitative Research calculation- Jio Financial’s departure could lead to the sale of approximately 105 million shares by Nifty passive trackers.

Nuvama said while NSE's price band circular for JFS is awaited, it should also have same 20 per cent filter as BSE.

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