BSE shares tank 9% today, stock crash 35% in six weeks; here's why

Shares of BSE Ltd dropped more than 9 per cent during the trading session on Wednesday as National Stock Exchange (NSE) changed the weekly and monthly F&O expiry days for Nifty, Bank Nifty and other indices to Monday from the current Thursday expiry day. This led to a notional correction in the counter.

Along with Nifty and Nifty Bank NSE has also changed the expiry day for FinNifty, Nifty Next50 and Nifty Midcap Select As for stocks in the derivatives segment, the monthly expiry will also be the last Monday of the month from the current last Thursday. The changes will come into effect from April 4, 2025 said NSE in the circular issued on Tuesday.

Shares of BSE tanked 9.39 per cent to Rs 4,035.10 on Wednesday, with the total market capitalization close to Rs 55,000 crore. The stock had settled at Rs 4,453.65 in the previous trading session on Tuesday. The stock has cracked nearly 35 per cent from its 52-week high at Rs 6,133.40 hit on January 20, 2025, while it is down 30 per cent in the last one month.

Beside the NSE's move, the rising volatility in the Indian stock markets have hit the volumes hard, impacting the exchange and broking companies. Even legal uncertainties and regulatory concerns are also weighing down on BSE.

Shares of BSE have been under pressure since a Mumbai court directed authorities to file a first information report (FIR) against former SEBI chairperson Madhabi Puri Buch, two BSE officials, and others over alleged irregularities in granting listing permissions to a company in 1994. The concerns over proposed regulatory changes by Sebi have also contributed to its volatility.

Overseas brokerage firm Goldman Sachs recently cut its price target on BSE to Rs 4,880 from Rs 5,650 earlier, maintaining its 'neutral' rating on the stock. Industry volumes, both in cash and options, have been softer in the month of February compared to estimates, Goldman Sachs wrote in its note.

BSE reported its net profit doubling to Rs 220 crore for three months ended December 2024. The leading stock exchange recorded its highest-ever quarterly revenue of Rs 835.4 crore in the December 2024 quarter, a 94 per cent jump on year-on-year (YoY) basis. It witnessed an average daily turnover of Rs 6,800 crore for the quarter, up 2.35 per cent YoY.

BSE reported a decent quarter, with revenue and Ebitda coming better than estimates, said HDFC Securities. "The management doesn’t expect such higher SGF contribution in the coming quarters, but we believe that with increase in market share and shift to longer duration contracts, the SGF requirement will gradually increase," it said.

The continued rise in quality of premium (P/N) is leading to lower clearing and regulatory cost resulting in margin improvement. The margin improved due to drop in clearing/regulatory expenses, HDFC said. "We lower our cash volume and book building revenue estimate but rise in options volume and better margins is leading to upgrade in estimates," it added with a 'reduce' tag and a target price of Rs 5,280.

However, Sharekhan changed its stance on BSE post Q3 earnings from neutral to positive even as the notional turnover has taken a hit due to new F&O regulations, premium turnover is improving as volumes shift to long dated contracts which is likely to aid strong revenue growth.

"An improving premium turnover would drive up transaction revenue and a higher premium turnover is expected to lower clearing and regulatory cost, thereby boosting margins that will aid strong earnings growth even factoring some incremental SGF amount," Sharekhan said with a positive view.