Shares of BSE continued to rally on October 25, surging more than 5.5 percent to scale a fresh record high. The stock has been rising since October 21 when the stock exchange revised transaction charges in the equity derivatives segment, with effect from November 1. These changes will primarily be levied on S&P BSE Sensex Options, particularly the nearest or immediate expiry contracts.
At 1:10pm, BSE shares were trading 4.6 percent higher on the National Stock Exchange at Rs 1,785.60 apiece. In the last five sessions, the stock has risen more than 20 percent.
According to the BSE notice, the new transaction fee structure is based on the incremental billable monthly turnover (premium value). "Accordingly, premium-based turnover on these nearest expiry contracts shall be calculated on a daily basis and cumulated at the end of the month. Transaction charges shall be levied based on the slab on the incremental turnover basis (as stated above) on cumulative turnover at the end of the month," BSE said.
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With the increase in transaction costs, margins for BSE in the coming quarters are bound to improve, as more traders join the options trading bandwagon and hence the phenomenal rally in the BSE stock price, according to AR Ramachandran of Tips2trades. Additionally, the rising demand for the stock is also driven by the robust growth in derivatives volumes and the rising traction in its mutual fund platform Star MF.
The BSE shares have surged nearly 50 percent in the last one month. The stock is up over 200 percent so far in 2023.
More steam left?
BSE is among Sharekhan's top Diwali stock picks. "We believe that BSE Ltd is likely to deliver strong earnings growth of 40 percent CAGR over the next three years, driven by an uptick in volumes for equity and index derivatives segments and increasing the transaction charges in derivative segment gradually as the company gains sustainable momentum in overall equity derivatives volume over the medium term," the brokerage firm said in its report.
Also Read | BSE raises transaction fee on equity derivatives from November 1; stock hits record high
Ashish Kyal of Waves Strategy Advisors told Moneycontrol that the trend is positive for BSE to move towards Rs 1,850. "If the channel resistance is broken, we can expect a move to Rs 2,000 levels, while on the downside, Rs 1,590 can act as a near-term support," he said. The positive trend is likely to continue in the stock and any dip should be used to accumulate the stock, he said.
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