The financial markets have been rife with news this week about the stock price of Jio Financial Services Ltd (JFSL), part of Mukesh Ambani’s Reliance Group, which recently touched an all-time low.
Jio Financial share price on Monday tumbled 4.3% during intraday trade, dipping below the psychological Rs 200 mark for the first time ever. On the Bombay Stock Exchange (BSE), the stock also fell to a record low of Rs 198.60, down 25 per cent on its Rs 265 opening listing price in August 2023.
Now, in this post, we will analyze what led to such a gigantic fall in the price of the share of Jio Financial, we will also take a technical view and discuss what it means for investors.
The Free Fall: Jio Financial Share Price
Jio Financial Services’ shares have been shedding wealth steadily since their debut on the exchanges last year. Investors were initially excited about the company’s prospects in the growing financial services industry. But the stock has not performed well in recent months.
- 1-Month Performance: Reliance Jio financial share price has been down 10.99% in the last month.
- Three-Month Performance: The stock has plunged 36.18% in the past three months.
- 1-Year Performance: Over the past year, Jio Financial share price has plummeted 32.64%, badly underperforming wider market.
For reference, the benchmark BSE Sensex index is up about 1.8% in the same time frame. While Jio Financial share price continued to struggle, the performance on the bourses was the polar opposite of the Sensex, prompting serious concerns about the company’s ability to market expectations in the near term.
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The Struggles of Jio Financial in the Market
Except for the concerns raised above, the price decline in Jio Financial share price, in recent months, could be attributed to its inability to scale its business and generate sustainable growth.
Although it has taken important steps to expand beyond core banking activities, including moves into mutual funds, asset management, and personal loans, it remains to be seen if the performance will follow.
Disappointing Earnings: In the December quarter, net profit at Jio Financial Services increased marginally by 0.32% year-on-year. But this was a marked fall over the Rs 689.1 crore net profit reported in the preceding quarter (Q2 FY25).
The total income from operations also declined on a quarter-on-quarter basis by 35.3%, mainly due to one-time dividend income from Reliance Industries Ltd in Q2 FY25.
Declining Asset Values: The assets under management (AUM) for Jio Financial have been expanding but have failed to keep pace with deteriorating market sentiment regarding its share price.
While analysts have said the company’s long-term outlook is bright, the erratic nature of earnings and the company’s continuing push to scale up is hard for investors to parse.
Regulatory Hurdles: The firm has also teamed up with global titans, including BlackRock, to ramp up its mutual fund and asset management business, but regulatory delays remain.
Such hold-ups in getting clearances from the Securities and Exchange Board of India (SEBI) had impeded the firm’s ability to introduce new products and expand operations efficiently.
The Role of Market Sentiment
Stock market sentiments are one of the most influential factors in determining the direction of stock prices. Jio Financial share price has been stuck under a cloud of negative investment sentiment that has only deepened its decline. As investors become more worried about the company’s near-term future, they sell their shares, which causes the price to fall even further.
On a technical basis, it appears that Jio Financial share price is in a “bearish” trend at the moment. Some analysts noted that the stock’s technical indicators were already flashing weakness, with the share price trading well below multiple key moving averages (such as the 5-day, 10-day and 50-day moving averages).
The RSI (Relative Strength Index), which gives the signal whether a stock is in oversold territory or not, stands at 25.02. An RSI above 70 is typically an overbought level, and below 30 is oversold, signalling a potential reversal. But this does not mean a quick recovery of Jio Financial share price.
What Lies Ahead for Jio Financial Share Price? Expert Analysis
But investors are now asking whether the worst may be over for Jio Financial Services or if another plunge looms. Few analysts expect a near-term rebound for the stock unless there is a big positive catalyst.
Support & Resistance Levels: As per Fibonacci retracement charts, analysts have identified a significant level of support to be at Rs 190 and Rs 184. If the Jio Financial share price continues below these levels, it may slip further towards Rs 170.83, which could be the next major support level.
On the higher end, the resistance is seen around the Rs 220-235 zone, where if the stock manages to cross the Rs 206, the upside target could be rs 237.
Long-term prospects: Analysts are generally more optimistic about the potential for Jio Financial for long-term investors. Its ventures into asset management and mutual fund businesses, partnerships with BlackRock, its strong balance sheet and the overall growing financial services market offer broad levers to accelerate growth.
While its fundamentals may remain volatile in the short run, the company’s digital-first play and strategic partnerships might lead to growth in the years ahead.
Valuation: Currently, Jio Financial share rate is quoted at a P/E of 249.19, a very high level. The ril jio financial share price-to-book (P/B) value is 5.32 while earnings per share (EPS) is 0.83, which indicates the stock is overpriced. Investors may sell off their shares at such a high valuation; this may also be another reason for Jio Financial’s share price fall.
Jio Financial Share Price in the Market
Jio Financial is not the lone company facing headwinds in the prevailing market scenario. The broader Indian equity market has been volatile over the past few months, and several sectors have underperformed. This broader weakness in the market, coupled with Jio Financial’s own challenges, has weighed on the stock’s ability to hold up.
It doesn’t help that stock in other sectors, like electric vehicles (EVs) and the broader financial services industry, have been facing pressure, too. Shares of the likes of Tata Motors and Bajaj Auto have plunged despite earnings that were marginally positive, anchoring the swing of caution around the broader market.
Nevertheless, Jio Financial’s massive scale in the Indian financial services sector ensures that it will inevitably be a serious contender in the market. The JFL share price should continue to lag until the company successfully stabilizes operations and proves that it can generate consistent revenue and profit growth.
Should Investors Buy, Hold, or Sell?
Based on current levels in Jio Financial share price, one may also question whether the stock is a buy, hold or sell. Still, the stock appears oversold over the short run, and some analysts have said that long-term investors may want to look for what they can add on pullbacks, considering the company’s growth potential in the financial services industry.
But for investors with a medium- to short-term investment horizon, it’s probably better to be cautious and steer clear of the stock until you see clearer signs of a recovery. Jio Financial share price outlook is uncertain in the short term, as technical indicators suggest further weakness ahead.
Unless the company resolves its operational and regulatory issues and is able to deliver a more consistent growth, Jio Financial stock price may remain under pressure. Should you be looking to invest in Jio Financial Services, it won’t be smooth sailing, as patience and long-term vision are needed.
The stock will find footing as the company escalates its efforts, attains the required approvals and successfully makes use of its strategic partnerships. So, just for now, keep an eye on the Jio Financial share price till it passes the stormy sea in its path.
Disclaimer: The content and information in this article is only for informational purposes and not for financial advice. Investments in the stock market are subject to market risks.
The past performance is no guarantee of future performance. Do your own research, and consult with a professional financial advisor before making any investment decisions. For detailed information on Jio Financial Services, please check this link or confirm it from an official source.
