Jio Financial Soars as NSE Expands F&O Segment with New Entrants
On November 14, shares of Zomato and Jio Financial Services rose sharply following the National Stock Exchange’s (NSE) announcement that 45 additional stocks would join the futures and options (F&O) segment.
Analysts from domestic brokerage JM Financial predict that with their inclusion in the F&O segment, Zomato and Jio Financial Services may enter the Nifty 50 index during its rebalancing in March 2025.
Zomato and Jio Financial See Sharp Gains Post F&O Inclusion
This potential shift might see auto giant Eicher Motors and oil marketing major BPCL exit the index. To be eligible for Nifty 50 inclusion, a stock must already be part of the F&O segment, a criterion Zomato and Jio Financial now meet.
By 11:10 a.m. on November 14, Zomato’s shares on the NSE had risen by 4% to Rs 268.68, while Jio Financial Services’ shares increased by 5.1% to Rs 315.7. Although Eicher Motors’ shares were up by nearly 8% at Rs 4,950 apiece due to positive quarterly earnings, BPCL’s shares saw a 2.5% dip, trading at Rs 298.2.
The inclusion of Zomato in the Nifty 50 index could drive passive inflows of approximately $607 million, while Jio Financial Services might see inflows of around $372 million. Conversely, should BPCL and Eicher Motors be removed, they may experience outflows of $223 million and $239 million, respectively.
The brokerage specifies that the index provider will use the average free float market cap between August 1 and January 31 to determine changes for the March rebalancing. Based on free float market data as of November 13, JM Financial anticipates these index adjustments to be officially announced in February 2025.
In addition to Zomato and Jio Financial Services, other prominent stocks included in the F&O segment are BSE, Paytm, Avenue Supermarts, Adani Green Energy, and Adani Total Gas. The NSE will communicate details on the market lot size, strike price range, and other relevant specifics for the newly added F&O stocks via a circular on November 28.
Shares of Jio Financial Services (JFS) were trading at Rs 318.70 by midday, marking a 6.45% rise. This upward trend provided some relief for JFS, which had experienced recent declines but is now gaining traction with its potential in the derivatives market. The inclusion of JFS and 44 other stocks in the F&O trading segment, as announced by the NSE, has further bolstered investor interest in these shares.
NSE to Roll Out F&O Trading for 45 New Stocks by November 29
A range of prominent companies will join the F&O listing on November 29, including Zomato, DMart, Paytm, LIC, YES Bank, and various Adani Group firms such as Adani Energy, Adani Green Energy, and Adani Total Gas. Other stocks set to enter the segment include Nykaa, CDSL, Tata Elxsi, KPIT Technologies, and JSW Energy, significantly expanding the pool of liquid stocks available for derivatives trading.
For a stock to qualify for the F&O segment, the NSE mandates that it must demonstrate strong liquidity, with a high average daily turnover and stable volatility. This screening process ensures a more secure trading environment for derivatives, helping investors manage the risk of extreme price changes.
F&O trading allows investors to engage in derivatives based on the underlying stock’s value, offering leveraged positions with a lower upfront investment compared to buying shares directly. This system provides added flexibility for investors looking to diversify their portfolios.
In its recent quarterly report for Q2 of FY25, Jio Financial Services reported a modest 3% rise in net profit, reaching Rs 689 crore, up from Rs 668 crore in the same period last year. Its operational revenue, however, showed a stronger increase, growing by 14% year-on-year to Rs 693.50 crore, compared to Rs 608.04 crore in the corresponding quarter of the previous year.
The entry into the F&O segment might present new growth opportunities for JFS, allowing investors an alternative to traditional stock trading as the company continues to build its presence in the financial market.
