On Wednesday, JM Financial shares plunged over 19% following Reserve Bank restrictions on group firm JM Financial Products Ltd due to manipulative activities. The stock dropped 19.29% to Rs 77.10 on the BSE and 18.75% to Rs 77.55 on the NSE. The company’s market capitalization decreased by Rs 1,484.53 crore to Rs 7,643.63 crore.
On Tuesday, the Reserve Bank imposed restrictions on JM Financial Products Ltd for engaging in manipulative activities, such as assisting its customers in bidding for IPOs using borrowed funds. The central bank has prohibited the NBFC from offering financing against shares and debentures, including loans for IPO subscriptions, with immediate effect.
In addition to instructing the entity to stop its financing activities, the Reserve Bank of India (RBI) stated that it is also investigating potential regulatory violations and shortcomings by the involved banks.
JM Financial Products can still manage its existing loan accounts through standard collection and recovery procedures.
What’s Causing the Drop in JM Financial Shares?
The RBI took significant regulatory action on Tuesday, imposing restrictions on JM Financial Products Ltd for engaging in manipulative practices, such as assisting its customers to bid for IPOs using borrowed funds.
The central bank also prohibited the NBFC from providing financing against shares and debentures, including loans for IPOs and debenture subscriptions, effective immediately according to a PTI report.
In addition to instructing the entity to stop financing activities, the RBI is investigating potential regulatory violations by banks involved.
JM Financial Products can continue servicing its existing loan accounts through regular collection and recovery methods. The RBI stated that these actions were necessary due to serious deficiencies in loans provided by the company for IPO financing and NCD subscriptions.
History of JM Financial Share Prices
JM Financial is part of the S&P BSE 500 index. Based on BSE analytics, its shares have dropped by 26% in the last month. However, over the past year, the stock has shown a positive return of 22%.
As of March 6, the company holds a market capitalization of Rs 7,600.63 crore, according to the BSE website.
Despite concerns about cryptocurrency market stability, such as the collapse of the FTX exchange and legal issues involving key figures, the approval of Bitcoin ETFs indicates growing trust and improving infrastructure.
According to James Knightley, chief international economist at ING, high inflation levels in the US have prompted people to buy Bitcoin as a hedge against rising prices. “Risk appetite has also surged in recent weeks, with tech stocks fueling a sense of FOMO [fear of missing out] in markets, and I think Bitcoin is caught up in all of this,” The Guardian quoted him as saying.
However, Gary Gensler, head of the Securities and Exchange Commission (SEC), still harbors reservations about the cryptocurrency market, despite reluctantly approving Bitcoin ETFs due to a court ruling. He stated, “Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.
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