Jio Financial Services Ltd (JFSL) is set to be removed from all S&P BSE indices, including the Sensex, prior to the trading session on September 1st. This decision comes as a result of a circular issued by the BSE on Thursday.Postponed Exclusion Due to Lower CircuitsOriginally, JFSL was expected to be excluded from the indices after August 23rd following its listing on August 21st, subsequent to its spin-off from its parent company, Reliance Industries Ltd. However, due to the stock experiencing lower circuits for several days, the exclusion was postponed.Recent Stock PerformanceOver the past three days, JFSL's stock has consistently shown gains, hitting upper circuits and avoiding lower circuits. This upward movement signals its imminent removal from various indices, including the BSE-30 indices.Market Capitalization and ValuationWith a market capitalization of ₹1.48 trillion, JFSL ranks as the third most valuable non-banking financial firm after Bajaj Finance and Bajaj Finserv. Analysts have been evaluating JFSL's valuations based on its 6.1% treasury stake in Reliance Industries Ltd (RIL), which it owns.Implications for Index FundsThe decision regarding JFSL's removal from the Nifty indices is also anticipated in the coming week. Index funds, which received JFSL shares following its demerger from RIL, may need to sell JFSL shares after its removal from the index. This selling pressure could lead to stock price volatility, potentially finding support in the range of ₹205-210.Prospects and PlansDespite the removal from indices, JFSL remains optimistic about its prospects. Aspiring to become a full-service financial services company, JFSL aims to focus on digital lending, asset management, and insurance businesses in the initial years. The company boasts a solid foundation supported by its large capital base, experienced team, strong brand, group customer base, and technological capabilities. Furthermore, its AAA rating from RIL is expected to help lower the cost of funds and liabilities.ConclusionWhile the stock might experience volatility due to the removal from indices and associated selling pressures, JFSL's strong foundation and growth plans position it for continued development in the financial services sector.Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.
