BSE Ltd’s stock experienced a significant dip of over 4% during Monday’s trading session, primarily influenced by a target price reduction from brokerage firm Nuvama Institutional Equities, which slashed its estimate by nearly 28%. As of 12:42 PM on March 10, shares were trading at ₹4,025, marking a total decline of more than 10% over the past week.

Reasons Behind Nuvama’s Target Price Reduction

Nuvama’s decision to adjust BSE’s target price stems from concerns regarding the potential erosion of the stock exchange’s market share. The brokerage stated, “Due to increased competition, uncertainty surrounding regulatory changes, and adjusted earnings per share (EPS) forecasts, we have lowered our target price-earning (PE) ratio to 40 times from 50 times, leading to a new target of ₹5,160, down from ₹7,250. We continue to maintain a ‘BUY’ recommendation.”

Competitive Landscape Alterations

Significantly, the National Stock Exchange (NSE) has moved the expiry date for its derivative contracts to Monday, a day ahead of BSE’s. Nuvama indicates that this shift may lead to reduced trading volumes, particularly affecting retail traders who typically engage more actively as expiry dates approach.

Interestingly, BSE had previously seen a rise in its index option premium market share, increasing from 16.4% in December 2024 to 22.1% in February 2025. This was largely due to BSE’s decision to change its Futures and Options expiry day from Friday to Tuesday. However, with NSE’s recent announcement to shift its index option expiry to Monday, effective from April 4, the dynamics may shift again.

Future Market Share Projections

Nuvama anticipates that this change could enable NSE to reclaim a significant portion of its market share, which stood at 83.6% in December 2024. In January, 22.9% of the premium turnover for the Sensex and 18.5% for Bankex occurred just before expiry, attributed to BSE’s Tuesday expiry compared to NSE’s Thursday expiry, creating a three-day gap.

With NSE’s expiry now aligning closely with BSE’s, Nuvama predicts that BSE’s market share could drop from 22% to 18% by February 2025. Additionally, regulatory factors, such as SEBI’s consultation paper on derivative exposure limits, may further hinder growth prospects for BSE.

Adjusted Profit Estimates and Market Reactions

Nuvama has also revised its profit forecasts downward, decreasing its projections for FY25 by 0.2%, FY26 by 13.4%, and FY27 by 11.6%. Consequently, the anticipated EPS compound annual growth rate (CAGR) for the period from FY25 to FY27 is now projected at 17.1%.

In a separate analysis, Goldman Sachs has similarly adjusted its target price for BSE twice within a week, citing ongoing challenges in the options trading market. They have maintained a neutral rating, lowering their target to ₹4,230, suggesting a potential decline of roughly 2% from the last closing price. Earlier, on March 3, they had already reduced their target from ₹5,650 to ₹4,880 due to anticipated difficulties in BSE’s trading performance.

These developments reflect the evolving and competitive nature of the Indian stock market, and investors are urged to stay informed on how these changes may impact their portfolios.