The downgrade follows BSE’s announcement of a change in the expiry day for its weekly Sensex contracts—from uesday to Thursday—effective September 1, 2025. According to Motilal Oswal, the shift is expected to impact BSE’s premium turnover market share, which stood at 22.6% in May 2025.
“We note that this shift will lead to a loss in market share for BSE in terms of premium turnover, which stood at 22.6% in May ’25,” the brokerage said.
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Currently, each trading day accounts for 18–22% of the week’s total premium volume. BSE holds a market share of 8% on Wednesdays and Thursdays, and 21%, 24%, and 38% on Fridays, Mondays, and Tuesdays, respectively. “Overlaying the current trends on the day-wise volume share for the week, we expect a market share loss of 350–400 basis points for BSE,” Motilal Oswal said.
The brokerage has also lowered its premium average daily turnover (ADTO) estimates for FY26/FY27 to Rs 137 billion and Rs 157 billion, respectively, down from Rs 155 billion and Rs 190 billion earlier. This results in a 9%/12% cut to its FY26/FY27 earnings estimates.“With the recent rally, the stock trades at a FY27E P/E of 53x—significantly higher than both its historical average and that of global peers,” the brokerage noted. It maintained its revised target price of Rs 2,300, valuing the stock at 45x FY27E P/E.Motilal Oswal further explained that since the implementation of new F&O regulations in March 2025, each trading day has contributed 18–22% to the week’s premium turnover. BSE’s average market share stood at just 8% on Wednesdays and Thursdays, with stronger performance on other days. “Assuming recent trends persist and applying them to the day-wise industry volume distribution, we estimate BSE’s market share may decline to 18–19% from 22.6% in May 2025,” it added.Also Read: Street favourites! Analysts see these 10 smallcap stocks rallying 20-80%The impact of the expiry shift is expected to become visible from September 2025, when the new contracts take effect.
Despite earlier regulatory changes introduced by SEBI since November 2024—including limiting weekly expiries to just one index per exchange and increasing the lot size of index derivatives—BSE’s volumes had strengthened. Premium turnover ADTO rose from Rs 90 billion in October 2024 to Rs 159 billion in May 2025, supported by higher volumes on non-expiry days and the addition of over 100 colocation racks in March 2025.
BSE also reported a strong performance in Q4 FY25, with revenue and PAT rising 75% and 366% year-on-year, respectively, even as the broader capital markets faced a weak quarter. This performance led to upgrades in earnings estimates and a subsequent re-rating of the stock.
Following Motilal Oswal’s downgrade, BSE shares fell as much as 6.15% to Rs 2,500 during Wednesday’s trade on NSE.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
