Jefferies downgrades BSE to Underperform as options risks mount

Jefferies has lowered its outlook on BSE to "Underperform" due to rising risks associated with options trading. The brokerage highlighted three key factors: a higher securities transaction tax, stricter Reserve Bank of India bank-guarantee rules, and the introduction of the Closing Auction Session. These changes have pressured domestic proprietary traders, who make up half of equity-options notional turnover.

As a result, BSE's daily options premium turnover declined by 12% year-to-date, while overall options ADTO dropped by 12% and 14% at BSE and NSE, respectively. Jefferies believes further market-share gains may not compensate for the slowdown, and analysts are less optimistic about future growth. The brokerage reduced its fiscal 2027-29 earnings-per-share estimates by 5%-12% and cut its price target by 16% to ₹2,940, based on a 34-times September 2028 earnings multiple.