Set by stock exchanges, price bands serve as limits for securities in order to curb extreme volatility in share prices.
The BSE has revised the price band for Jio Financial Services to 20% from the earlier 5%, effective Monday. It was among 10 stocks for which the exchange announced a revision in price bands.
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Set by stock exchanges, price bands serve as limits for securities in order to curb extreme volatility in share prices.
In addition, the stock will no longer be in the trade-to-trade (T2T) segment. The stock is expected to be removed from the NSE indices this week, subject to the condition that it doesn’t hit the upper or lower circuit in two consecutive sessions.
Analysts say that with thanks to revision of the price band from 5% to 20%, chances of Jio hitting upper/lower circuits are slim.
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According to Nuvama Institutional Equities, Jio could exit the NSE indices on Wednesday if it doesn’t hit the circuit limit on Monday and Tuesday. Nuvama’s calculation suggests JFS’ exit could lead to the sale of 105 million shares by Nifty50 passive trackers.
However, JFS remains part of the MSCI and FTSE indices, without affecting inflow or outflow.
JFS was removed from all BSE indices including the Sensex on September 1. In the final thirty minutes of trading, a total volume of around 64 million shares was observed, largely attributed to Sensex passive sellers.
The removal was deferred owing to the stock hitting the lower circuit for the first four sessions after listing, mostly on account of selling pressure by index funds.
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However, over the past few trading sessions, the stock has reversed some losses. It has touched the upper circuits at times and avoided the lower circuits.
Re-inclusion in the BSE indices would be dependent upon the stock fulfilling parameters set by the exchanges, such as being listed for at least 6 months and trading in every single day, besides being in the stock futures segment.
JFS had earlier announced a partnership with BlackRock to enter India’s asset management industry with an initial outlay $150 million each. At the Reliance Industries AGM held last week, it was announced that JFS would enter the insurance industry, offering life, general, and health insurance products.
