Unlisted shares of MSEI plunge as revival optimism fades away; price drops 65% since December

Unlisted shares of MSEI plunge as revival optimism fades away; price drops 65% since December

Shares of Metropolitan Stock Exchange of India (MSEI) have seen a huge 65 percent fall in the current calendar year in the unlisted segment as optimism around its revival faded away with stricter rules put in place in the equity derivatives segment.

Data from Unlisted Zone shows that the MSEI shares are currently hovering a little below Rs 5, plunging nearly 14 percent in the last 15 days. More importantly, the shares have dropped nearly 65 percent since December – falling from Rs 14 to the current levels.

According to experts, the sentiments around MSEI turned bleak after the Securities and Exchange Board of India (SEBI) directed that only two days – Tuesday and Thursday – can be fixed as expiry days for the derivative contracts. This was after the regulator said that only one weekly expiry contracts would be allowed per exchange.

This assumes significance as there was a lot of traction in the shares of MSEI when new norms were announced for the F&O segment. It was believed that MSEI would be able to launch a weekly expiry contract with an expiry day different from that of NSE or BSE, which would help the exchange attract significant trading volumes. However, the SEBI diktat on only two days permitted for expiry dashed investor sentiments.

“The initial rally in MSEI’s share price was driven by investor optimism that the exchange would be allowed to launch weekly F&O contracts with an expiry date different from those of NSE and BSE. However, the recent SEBI regulation restricting this possibility dampened sentiment, leading to a correction in the stock,” says Umesh Paliwal, co-founder, Unlisted Zone.

“Subsequently, news emerged about MSEI’s plans to raise additional capital and expand into new segments. While these developments signal growth intentions, the real test lies in the exchange’s ability to successfully roll out competitive products -- such as offerings in the cash market or bond market, and generate meaningful revenue. With the exchange space being intensely competitive, the coming 6–8 months will be crucial for MSEI. These uncertainties have collectively contributed to the recent decline in its share price,” adds Paliwal.

Last month, the board of the exchange approved a decision to raise as much as Rs 1,000 crore and further said that the proposed allottees would include Peak XV Venture Partners Investments VII, Share India Securities, Trust Investment Advisors, Marwadi Chandarana Intermediaries Brokers, and Monarch Networth Capital among others.

This was following an earlier board meeting in December when the exchange approved raising nearly Rs 240 crore from marquee names like Billionbrains Garage Ventures (promoter entity of Groww), and Rainmatter Investments (Kamath brothers of Zerodha), along with Securicorp Securities India, and Share India Securities.

Meanwhile, in an emailed response, MSEI said that there is huge potential in this country for more than two stock exchanges to operate and survive as we are a growing economy.

"We are truly humbled and encouraged by the market’s positive response to our recent initiatives — including two successful rounds of fundraising and the growing interest from market participants.
We shall soon be relaunching equity segment followed by other segments. Further, we will continue to introduce new initiatives, along with niche products and services to meet the evolving needs of the market," it said.