BSE Shares Slide Over 5% as Goldman Sachs Lowers Target Price Amid SEBI’s Proposed Regulatory Changes
BSE Shares Slide : Shares of BSE Ltd. witnessed a sharp decline of over 5% in intraday trading on Monday after global brokerage firm Goldman Sachs slashed its target price for the stock. The downgrade comes amid concerns over regulatory changes proposed by the Securities and Exchange Board of India (SEBI), which could significantly impact proprietary trading—one of the key drivers of BSE’s trading volumes.
Goldman Sachs’ Target Price Cut and SEBI’s Regulatory Proposals
Goldman Sachs lowered its target price for BSE from ₹5,650 to ₹4,880, implying a potential upside of just about 5% from its previous close. While the brokerage retained a neutral rating on the stock, it highlighted that SEBI’s proposed changes in risk management and open interest (OI) computation could negatively affect BSE’s revenue streams.
SEBI, in its consultation paper released on February 24, proposed a shift in how open interest is calculated in the equity derivatives segment. The regulator aims to move away from the notional terms approach to a future-equivalent or delta-based model. This adjustment is intended to reduce market manipulation risks and better align derivative positions with the cash market’s liquidity.
Goldman Sachs cautioned that such changes might lower the industry’s options premium to cash equity turnover ratio from 0.4x to 0.3x. Consequently, the contribution of index options contracts to the average daily premium traded may remain capped at 30%, as opposed to 22% in February.
Legal Challenges Compound Investor Worries
Further dampening investor sentiment, a Mumbai court has directed the police to file a First Information Report (FIR) against former SEBI chief Madhabi Puri Buch, two senior BSE officials, and others. The case relates to alleged irregularities in granting listing permissions to a company on BSE back in 1994.
While this legal development does not have an immediate financial impact on BSE, it has added uncertainty regarding the exchange’s governance and regulatory standing.
Stock Performance and Market Reaction
Following the target price cut and regulatory concerns, BSE shares tumbled 5.1% to an intraday low of ₹4,395.7 on March 3. Despite this fall, the stock remains a multi-bagger, having surged nearly 97% over the past year.
However, recent months have been volatile for BSE’s stock price:
| Month | Performance |
|---|---|
| February 2025 | -13% |
| January 2025 | -0.37% |
| August – December 2024 | +108% (five-month rally) |
The stock’s February correction follows five months of robust gains, where BSE more than doubled in value from August to December 2024.
Financial Metrics and Key Ratios
| Metric | Value |
|---|---|
| Market Cap | ₹58,000 crore |
| P/E Ratio | 65.4x |
| 52-Week High | ₹5,590 |
| 52-Week Low | ₹1,870 |
| Dividend Yield | 0.20% |
| ROE (Return on Equity) | 18.5% |
What Lies Ahead for BSE?
While BSE has delivered impressive gains over the past year, the proposed regulatory shift by SEBI could pose significant challenges for trading volumes. Proprietary traders, who account for nearly 70% of BSE’s daily turnover, may reduce their participation if the new framework increases capital requirements or restricts leveraged trades.
At the same time, ongoing legal proceedings could prolong uncertainty around BSE’s governance, impacting investor confidence.
Market participants will now closely monitor how SEBI finalizes the new risk management norms. If the changes prove to be restrictive, BSE’s trading volumes and revenue growth could take a hit. On the other hand, any relaxation in the final guidelines may provide relief to the exchange and its stock performance.
For now, BSE’s stock remains under pressure, with investors awaiting further regulatory clarity before making fresh investment decisions.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.