Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, believes BSE could be among the biggest beneficiaries of the Securities and Exchange Board of India’s (SEBI) latest changes to closing auction session (CAS), with a potential recovery in derivatives trading volumes supporting the exchange’s growth outlook.
BSE shares have already gained nearly 10% from their recent lows as investors factor in the potential benefits of the regulatory changes.
He added, “The preferred beneficiary of these changes that has been announced by SEBI in respect to the CAS settlement, BSE would be one of the top ideas, followed by some of the broking stocks, for example, Groww, Angel One. They would also see the benefit of increased derivatives volume.”
For BSE average daily options turnover had declined to below ₹20,000 crore from around ₹25,000 crore to ₹30,000 crore earlier, before showing some improvement in September.
Khemka said BSE could gain more market share than NSE in the derivatives segment. He added that the recent correction in BSE’s share price has made its risk-reward profile more attractive than that of NSE, given its potential to gain from a recovery in derivatives trading volumes.
Turning to the IT sector, Khemka said Persistent Systems continues to report strong revenue growth, but margin pressure and uncertainty around its proposed acquisition of Nagarro could limit near-term stock performance.
Persistent Systems reported 7.8% quarter-on-quarter revenue growth, driven entirely by organic business. However, the impact of acquisition-related costs has weighed on profitability, while the proposed Nagarro deal raises questions about integration expenses, leverage and future earnings growth.
Khemka noted that Persistent Systems‘ valuation, at around 35 times estimated FY28 earnings, leaves limited room for disappointment, particularly when compared with large-cap IT companies trading at more attractive valuations.
“Right now, our preferred picks are Tech Mahindra and HCLTech in the largecap space, and selectively we continue to like Persistent and Coforgebecause of the high growth they are able to demonstrate in the midcap IT space,” he said.
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BSE preferred over NSE as SEBI changes boost derivatives outlook, says Motilal Oswal
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