BSE Share Price Hits Record High As NSE To Halt Three Weekly Option Contracts

Shares of BSE Ltd. surged nearly 8% to their record high on Friday after rival National Stock Exchange announced the discontinuation of three weekly option contracts.

The NSE announced on Thursday that it will discontinue its weekly index derivatives contracts on Bank Nifty, Nifty Midcap Select, and Nifty Financial Services, effective from Nov. 13, Nov. 18, and Nov. 19, respectively.

The decision aligns with the SEBI directive from Oct. 1, which restricts weekly option expiries to one per exchange starting from Nov. 20. The market regulator's decision aims to regulate the futures and options trading segment.

On Oct. 3, BSE announced the discontinuation of weekly index derivatives contracts on Sensex 50 and Bankex from Nov. 14 and Nov. 18, respectively.

This means that weekly expiry derivatives contracts will continue only on the frontline indices of BSE Sensex and NSE Nifty 50.

The changes, which will come into effect next month, will provide an opportunity for BSE to compete against NSE on more days in the week, analysts at Motilal Oswal Financial Services Ltd. said in a recent report. Currently, the NSE held an edge with expiry derivatives contracts on all days except Friday.

For BSE, since large volumes were happening on expiry day, its premium to notional turnover ratio was at 0.07% against 0.16% for NSE, MOSFL stated in the report, citing the data available for September 2024.

"With the probability of volumes increasing farther than expiry days, this ratio would increase for BSE. This will not only help in revenues but also in bringing down the clearing and settlement costs," it added.

Shares of BSE closed 7.54% higher at Rs 4,534 apiece on the NSE, compared to a 0.14% decline in the Nifty 50. The stock is up 102.4% on a year-to-date basis and by 203.4% over the past 12 months. The stock surged 7.92% to hit a record high of Rs 4,550 apiece.

Four out of seven analysts tracking BSE have a "buy" rating on its stock, two suggest a "hold," and one recommends a "sell," as per Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 24.3%.