BSE shares drop 3% after second downgrade in two days. Nuvama lists CAS among 3 key headwinds
BSE shares extended their losing streak after Nuvama downgraded the stock to Hold and cut its target price, citing three key concerns: the impact of CAS on trading volumes, tighter bank guarantee norms and limited scope for further market-share gains. Jefferies also recently downgraded the stock, adding to pressure on its earnings outlook.
On Tuesday, BSE shares experienced a 3% decline, marking their lowest level in about five months and continuing a five-day losing streak. Nuvama, a brokerage firm, downgraded the stock's rating to "Hold" from "Buy" and reduced its target price to Rs 3,240 from Rs 4,090. The downgrade was attributed to three converging headwinds for the company in FY27.
Firstly, the newly introduced closing auction session (CAS) has caused confusion among traders, leading to lower participation and lower premium volumes. The index option premium volumes (ADPTV) have fallen to the lowest level since January 2025. The brokerage highlights that BSE’s expiry-day contracts have experienced a 33% drop compared to 24% for non-expiry contracts.
Secondly, bank guarantee norms implemented by the RBI could further impact the stock's performance. Tighter collateral requirements may increase capital intensity for intermediaries, reducing turnover efficiency in high-frequency strategies, which could dampen recovery prospects into FY28.
Lastly, Nuvama noted that BSE's market share is already high at around 51.5%, but its contribution to ADPTV remains lower at 36%. This limited growth potential indicates that there are no near-term triggers for further upside in contract share.
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