Why Jio Financial Services shares of Reliance were Hitting a Lower Circuit Daily
The reason behind the daily lower circuit in Jio Financial Services shares is quite interesting.
Reliance Industries Limited has provided shareholders with a share of Jio Financial Services. While Reliance Industries holds a stake of 13.35% in the Sensex, it holds 9.87% in the Nifty50. Following the distribution of shares by Reliance Industries to all index funds, JFS has around ₹30,000 crores worth of shares that they cannot hold. This is why Jio Financial Services is not a part of the index.
On Monday, August 21, as trading in Jio Financial Services shares began, index funds had no option other than to sell shares. When there was intense selling of Jio Financial Services shares, the pressure on these shares increased, leading to a decline in their price. Index funds sold several thousand crores worth of Jio Financial Services shares in one go.
As a result, within a few seconds, Jio Financial Services shares reached the lower circuit. Once the lower circuit was triggered for Jio Financial Services shares, selling was halted. This means that index funds had no option left to sell shares.
On the next day, August 22, as soon as the share market opened for business, index funds started selling Jio Financial Services shares again. Subsequently, shares worth several thousand crores of Jio Financial Services were sold. After this, once again, Jio Financial Services shares hit the lower circuit.
But the game has begun now.
When Motilal Oswal entered this game, Jio Financial Services saw an increase of more than 3%. Motilal Oswal Mutual Fund has acquired a 2.99% stake in Jio Financial Services for Rs 754 crore. This investment was made through the secondary market.
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