Mumbai: Jio Financial Services Ltd (JFSL) had a tepid listing on Monday as it opened with marginal gains to the discovered price and later ended at the lower circuit of 5 per cent on selling by index funds.

Shares of the demerged financial services arm of Reliance Industries Ltd (RIL) debuted at Rs 265 on the BSE, a small gain of over Rs 261.85, which was the price discovered at a special session last month.

However, investors soon started selling the stock after it hit an intra-day high of Rs 278.20. The counter later settled at Rs 251.75, a loss of 5 per cent or Rs 13.25 from the opening price.

Jio Financial Services listed at Rs 262 on the NSE and closed at the lower circuit of 5 per cent at Rs 248.90.

The closing price meant JFSL commanded a market valuation of Rs 1.59 lakh crore on the BSE. In terms of market capitalisation, Jio Financial is the 34th most valued company on the exchanges.

In volume terms, 35.51 lakh shares were traded on the BSE and over 7.47 crore shares on the NSE.

An analyst with a foreign brokerage said he was not surprised with the muted listing since the company is yet to announce its business model and it has little revenues, making it a long-term story.

He said the stock could also be removed from the benchmark indices over the next three days, and this led to the selling by index funds.

A large part of the stock’s value is derived from its 6 per cent holding in Reliance Industries Limited, the analyst said.

Though JFSL is part of the Sensex and Nifty, it will be traded in the “trade-for-trade’’ segment for 10 sessions.

Market analysts said demerged companies are usually first traded in this segment.

After 10 sessions, the bourses decide which segment it will be traded.

In the T2T segment, intra-day trading is not allowed and investors have to take delivery of the stock. Moreover, circuit filters of 5 per cent will apply on the trade.

The analysts said JFSL will be removed from the benchmark indices after three trading sessions.

If it hits the circuit filter in the first two sessions, the removal will be deferred by further three days.

“Expectations were fairly high ahead of the listing. However, the fair price discovery for the stock will still take some time and till then we can expect some drifting in the share price,’’ Arun Kejriwal, director, KRIS, an investment research firm told The Telegraph.

All eyes are now on the address of Mukesh Ambani to the shareholders of Reliance Industries Ltd (RIL) at its annual general meeting next Tuesday.

He is expected to give some colour on the segments in which JFSL will straddle.

“JFSL’s valuation is based on expectations surrounding its future growth potential and its 6.1 per cent stake that it owns in RIL.

“The future growth prospects of JFSL are indeed bright since it can scale up its business hugely with its enormous connection with consumers and merchants.”

“But institutional selling is a drag on the share price in the near-term. Since the stock is in the T segment institutional selling is pulling down the stock,’’ V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, said.

“JFS will differ from most other fintechs in having access to huge amounts of data gathered from a non-financial relationship,” analysts at Macquarie Research said in a note earlier this year, referring to Reliance’s retail and telecom units.

“It can process and analyse those in real time to offer financial services such as Alibaba, Amazon, Apple, Facebook, Google etc,” the research note added.

With inputs from Reuters