BSE Shares Decline as Brokerages Downgrade Stock Ahead of Nifty 50 Inclusion

Shares of BSE Limited closed 0.72 per cent lower at ₹3,308 on Tuesday, pressured by fresh downgrades from institutional brokerages. The stock movement precedes its scheduled inclusion in the Nifty 50 index, which is set to take effect from September 30, replacing Wipro.

The downward pressure follows a series of regulatory and operational headwinds. Jefferies downgraded BSE to 'Underperform' from 'Hold', reducing its price target by 16 per cent to ₹2,940. The brokerage highlighted a combination of factors, including the Securities Transaction Tax hike, tighter Reserve Bank of India bank-guarantee norms that increase collateral costs, and the implementation of the new Closing Auction Session.

According to reports, the Closing Auction Session has impacted trading metrics, with options average daily premium turnover dropping by approximately 12 per cent in August. Consequently, Jefferies lowered its FY27-29 EPS estimates by 5 to 12 per cent.

Nuvama Institutional Equities also revised its stance on the stock, downgrading it to 'Hold' from 'Buy' and slashing its price target from ₹4,090 to ₹3,240. Nuvama adjusted its FY27 and FY28 EPS estimates downward by 6.3 per cent and 15 per cent, respectively. The brokerage noted that BSE’s average daily premium turnover fell to ₹181 billion last week, marking its lowest level since January 2025.

The newly introduced Closing Auction Session has particularly affected BSE's expiry-day trading ecosystem, which historically accounts for 70 to 79 per cent of the exchange's weekly contracts. In the first week following the CAS implementation, BSE contracts declined by 30.5 per cent week-on-week, dropping from 150 million to 104 million contracts.

Despite these near-term operational challenges, the stock's impending entry into the Nifty 50 index is expected to provide some market support. JM Financial estimates that the inclusion will trigger passive inflows of approximately $650 million.

BSE shares currently trade within a 52-week range of ₹2,021.50 to ₹4,446.80. Over the past year, the stock has posted a return of roughly 33 per cent, though it has fallen over 8 per cent in the past week amid the reassessment of its earnings trajectory.

"The recent downgrades of BSE highlight how structural regulatory changes and market design updates can directly impact exchange-traded volumes and near-term earnings. While index inclusion often brings passive inflows that act as a stabilizing factor, institutional caution emphasizes the importance of adaptability in evolving regulatory environments. Long-term market participants must weigh short-term trading disruptions against broader structural growth indicators." — Dr. Shishir Gupta, Founder & CEO, StartupLanes