BSE Ltd shares fell more than 3 percent in the early trading on Wednesday after Bernstein initiated coverage on the stock with an ‘underperform’ rating. Analysts said that the stock exchange is entering a normalisation phase after strong growth fuelled by rising retail participation in equity derivatives.
Bernstein set a target price of Rs 2,820 per share on BSE stock, implying downside of around 17 percent from Tuesday’s closing price. BSE shares were trading at Rs 3,285, down 3.2 percent from the previous close. Despite the recent weakness, the stock remains up 29.2 percent so far in 2026, with the exchange commanding a market capitalisation of more than Rs 1.38 lakh crore.
The brokerage said retail participation has driven strong earnings growth and valuation gains for Indian exchanges in recent years. However, the equity derivatives-led retail wave is now showing signs of moderation, potentially weighing on the growth trajectory of exchanges heavily exposed to the segment.
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For BSE, Bernstein expects market-share gains to peak in FY27, with growth subsequently normalising. The view suggests that the sharp expansion enjoyed by the exchange as it built its presence in equity derivatives may become harder to sustain from here.
The cautious Bernstein view comes amid broader concerns over trading volumes at BSE. The exchange’s management has acknowledged that the recently introduced Closing Auction Session (CAS) has resulted in lower index options volumes, with limited liquidity in the auction session affecting participation.
The CAS framework, introduced by SEBI on August 3 to determine closing prices in the cash market, has also faced scrutiny over divergent index closing levels across exchanges, volatility in options pricing and concerns around expiry-day trading. SEBI said last week that it would review the methodology for determining derivatives settlement prices after receiving feedback on the new mechanism.
Separately, the increase in securities transaction tax (STT) and its potential impact on trading activity have added to concerns around the earnings outlook for exchanges. Other brokerages, including Nuvama and Jefferies, have recently turned more cautious on BSE. PL Capital cut its target price to Rs 4,025 from Rs 4,850, although it retained a ‘buy’ rating.
Meanwhile, Bernstein is more constructive on Multi Commodity Exchange of India (MCX), initiating coverage with an ‘outperform’ rating and a target price of Rs 3,830 per share. The target implies around 15 percent upside from MCX’s Tuesday close of Rs 3,342. Bernstein sees commodities as an inflection opportunity, with equity derivatives offering a long runway for cross-pollination. MCX shares have surged 52.1 percent so far in 2026, giving the exchange a market capitalisation of more than Rs 85,200 crore.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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