Is It the Right Time to Invest in Jio Financial Services Post Delisting from Sensex and Nifty?
As of recent developments, there has been considerable debate around whether the investment in Jio Financial Services is advisable amidst its delisting from major indices like the Sensex and Nifty. This piece aims to provide a comprehensive analysis, considering both the technical and market factors to guide retail and long-term investors.
Understanding the Delisting: A Technical Perspective
It is crucial to understand that the removal of Jio Financial Services from the Sensex does not necessarily imply a delisting of the stock from the Bombay Stock Exchange (BSE).
According to the Bombay Stock Exchange, the stock remains listed but has been confined to the 'Trade for Trade' (T2T) segment. This segment implies that while transactions can occur, the stock cannot be taken for delivery. This indicates that while the stock is not completely out of the market, it is severely limited in its trading range.
This alteration to the stock's circuit limit from 5 to 20 signifies a significant measure taken by BSE to restrict the volatility of trading in Jio Financial Services. The continued listing under T2T status is aimed at stabilizing its trading environment and potentially encouraging investment.
Current Market Performance and Recommendations
Despite the tech-driven volatility, Jio Financial Services has shown resilience with a positive closing today, gaining 3.88% and spreading green across portfolios containing it. However, questions remain among retail investors regarding the future of this stock.
Technical analysis in terms of the Sensex does not automatically equate to delisting. It means the stock is out of intraday trading. Retail investors should not interpret its listing status from Sensex as a basis for making major investment decisions.
Market Capitalization and Indicators
As a newly listed company, Jio Financial Services has attracted attention for its position in the Non-Banking Financial Companies (NBFC) sector. It stands as the third largest NBFC in terms of market capitalization, after Bajaj Finance.
Key metrics such as Return on Equity (ROE) and Return on Capital Employed (ROCE) are notably negative, which is a notable red flag for potential investors. However, the face value of Jio Financial Services is set at 10, offering a reasonable starting point for assessment.
For short-term investors, it is strongly recommended to stay away from this stock given the significant downturn in its first three days of trading following the initial public offering (IPO) price of 262. Long-term investors are advised to wait and watch, particularly for signals such as crossing the IPO level (262) or breaking down to 165.
Recent Developments and Analysis
Recent sources have suggested that LIC (Lagcy Insurance Company) has acquired a 6.7% stake in Jio Financial Services. This significant stake acquisition provides a foundation of stability and confidence in the stock. If the downward trend continues and breaks the level of 200, it might signal an opportunity to buy at levels around 160-150, which could be a second entry point for investors.
It is noteworthy that I am not a SEBI-registered advisor. Therefore, any investment advice provided here should be carefully considered in conjunction with other professional advice.
Conclusion
In conclusion, while Jio Financial Services' recent moves are creating a whirlwind of investment options, it is essential to base any decisions on solid ground, such as technical indicators, market trends, and long-term outlook. Retail investors should remain cautious and consider both short-term and long-term strategies before committing to any investment in this stock.
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