Indian stock mkt's CAS(e) may change for the better

The Bombay Stock Exchange (BSE) may see a positive shift in the stock market following Sebi's proposed changes to the Closing Auction Session (CAS). The new system, introduced in August, initially caused significant market volatility and investor concern. However, Sebi has now proposed two options for determining expiry-day settlement prices for index and stock derivatives, as well as changes to the timing of the continuous trading session (CTS) and derivatives trading.

These measures aim to improve the new session and enhance liquidity during the CAS window. Jefferies, an international brokerage, expressed optimism about these changes, suggesting they could reduce end-of-period volatility on expiry days. Despite this, Jefferies remains negative on BSE shares, citing limited options industry growth and potential RBI tightening of bank guarantee norms.

In contrast, Jefferies recommends investing in Groww, a company that stands to benefit from the resolution of CAS issues, as F&O accounts for around 55% of its revenue. Jefferies anticipates a 30% PAT CAGR for Groww over FY26-29, driven by growth in broking business, margin trading facility, wealth management, and a 10pp margin expansion.