BSE shares jump 4.6% as Motilal Oswal bets on derivatives rebound after CAS reversal

BSE shares climbed 4.59 per cent on Monday after Motilal Oswal upgraded the exchange to buy with a ₹4,000 target price, arguing that a partial reversal of the Closing Auction Session framework will revive derivatives trading. The stock touched an intraday high of ₹3,379.30 on the NSE and was trading at ₹3,370.50 at 12.21 pm.

The brokerage's case rests on a sharp turn in futures and options activity. BSE's notional average daily traded turnover rose 85 per cent in October 2026 month-to-date, it said, reversing the 34 per cent month-on-month decline that followed the CAS reset in August. The partial reversal, effective December 7, 2026, gives the recovery a regulatory catalyst beyond the current volatility-driven volumes, according to Motilal Oswal.

Motilal Oswal expects BSE's FY27 notional ADTO to reach ₹216 trillion, up 16 per cent year on year, with further upside if the rebound holds. It said the exchange has won more than 30 per cent market share in premium turnover, while the premium-to-notional ratio has risen to about 14 basis points from 6-7 basis points in 2023-24, against more than 20 basis points for the National Stock Exchange. Further convergence, driven by institutional participation and longer-dated contracts, could add earnings upside beyond volume growth, the brokerage said.

BSE's cash-market share has improved from around 7 per cent to around 9 per cent, and Motilal Oswal flagged NSE's listing and the opening of its lock-in in March 2027 as potential catalysts for higher cash turnover. It also pointed to the Star MF platform, where quarterly transactions have grown from 12 million in the first quarter of FY20 to 245 million in the second quarter of FY27, generating more than ₹800 million in quarterly revenue. Co-location contributes ₹450-480 million a quarter, with room for further capacity and pricing gains, it said.

The brokerage expects BSE's EBITDA margin to reach 70 per cent, after expanding to more than 65 per cent in FY26 from 9 per cent in FY21, and forecasts a roughly 27 per cent compound annual growth rate in profit after tax between FY26 and FY28 alongside 23 per cent revenue growth. It raised its revenue estimates by 8 per cent for FY27 and 10 per cent for FY28, and its PAT estimates by 10 per cent and 12 per cent respectively, citing the strong volume run-rate, the expected benefit of the CAS reversal and the potential impact of NSE's listing on cash-market volumes. A sustained recovery combined with an improving premium-to-notional ratio could lift FY28 estimated PAT by a further 20 per cent, Motilal Oswal said.