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BSE Faces Downgrades Amidst Regulatory Hurdles
18 Aug
Summary
- BSE shares fell 0.72% on Tuesday, closing at ₹3,308.
- Brokerages Jefferies and Nuvama downgraded BSE due to regulatory concerns.
- A new auction session disrupted BSE's expiry-day trading ecosystem.
BSE Limited shares closed 0.72% lower at ₹3,308 on Tuesday, as the exchange prepares for its inclusion in the Nifty 50 index on September 30. However, mounting regulatory headwinds have prompted fresh downgrades from brokerages, casting a shadow over its prospects.
Jefferies downgraded BSE to 'Underperform,' citing a "triple whammy" of increased Securities Transaction Tax, tighter RBI bank-guarantee norms, and the new Closing Auction Session (CAS). This CAS has already reduced options average daily premium turnover by approximately 12% in August. Jefferies trimmed its earnings per share (EPS) estimates for FY27-29 by 5-12%.
Similarly, Nuvama Institutional Equities downgraded the stock to 'Hold,' slashing its price target significantly. Nuvama reduced its FY27 and FY28 EPS estimates, projecting lower average daily premium turnover. The introduction of CAS, designed to align Indian markets with global practices, has notably disrupted BSE's expiry-day trading, which historically accounts for a substantial portion of its contracts.
Despite these challenges, NSE confirmed BSE's replacement of Wipro in the Nifty 50 from September 30. JM Financial estimates this inclusion will bring approximately $650 million in passive inflows, potentially offering a near-term boost.
