Shares of BSE Ltd extended their decline for a third straight session on Wednesday, falling as much as 3.4% to ₹3,131.50 on the NSE, as investors remained concerned about the impact of the newly introduced Closing Auction Session (CAS). The stock has fallen over 8% in three days, dragging its market capitalisation to ₹1.29 lakh crore.
The BSE share price has plunged over 11% in the past one month, while it has gained more than 20% in calendar year 2026. Over the past year, the exchange has delivered a 45% return to its shareholders. The stock touched a 52-week high of ₹4,446.80 on May 27, 2026, and a 52-week low of ₹2,021.50 on September 26, 2025.
BSE shares also faced pressure amid reports that rival National Stock Exchange (NSE) could allow its shares to trade on its own platform under the “permitted to trade” category after listing on BSE.
The sell-off intensified on Wednesday after BSE management reportedly acknowledged that the CAS, introduced on August 3, has resulted in lower participation from high-frequency trading (HFT) firms, proprietary trading accounts and retail investors.
Equity derivatives turnover on the BSE fell to multi-month lows in August, with analysts attributing the decline partly to the changes brought about by the CAS mechanism. The exchange’s equity derivatives turnover stood at ₹32.2 lakh crore in August, its lowest level since June 2025.
Brokerages have turned more cautious on BSE as the new closing mechanism coincides with other regulatory headwinds, including tighter bank guarantee norms and a higher securities transaction tax (STT) on futures and options.
PL Capital said industry derivatives volumes contracted around 6% month-on-month in August following the implementation of CAS. It expects BSE’s index options volumes to grow at a slower 23% in FY27 and 20% in FY28, compared with its earlier expectations, and has cut its FY27/FY28 profit estimates by 2-6%.
The brokerage said BSE continues to command around 35% market share in index options on a year-to-date basis, but the sharp decline in August volumes has prompted it to lower its growth assumptions. Its sensitivity analysis suggests that BSE’s FY27/FY28 profit could take a 1-2% hit if NSE is allowed to trade its shares on its own platform, assuming BSE’s cash-market share does not improve further.
PL Capital has cut its 12-month target price for BSE to ₹4,025 from ₹4,850, while retaining its ‘buy’ rating.
Global brokerage Jefferies is more cautious. It said domestic proprietary traders, which account for a significant portion of equity options notional turnover, are facing a combination of headwinds from the STT hike, RBI’s bank guarantee norms and CAS.
“BSE’s revenues from domestic prop traders (50% of notional turnover) could be at risk due to headwinds from STT hike, RBI bank guarantee (BG) norms and Closing Auction Session (CAS),” Jefferies said in its report.
The brokerage noted that BSE’s options average daily traded turnover (ADTO) in August was down 12% from July. It has cut its FY27-FY29 earnings-per-share estimates by 5-12% and reduced its price target by 16% to ₹2,940 from ₹3,500.
Jefferies, however, expects average daily turnover to recover in the second half of FY27 as market participants adjust to the CAS mechanism. It cautioned that if market share remains flat in FY28-FY29, there could be another 2-5% downside to earnings.
The potential for NSE shares to trade on its own platform has emerged as another concern for BSE investors. Under the current regulatory framework, a stock exchange cannot simply list and trade its own shares on its platform. NSE would require Sebi approval for such an arrangement.
PL Capital said the potential listing of NSE shares on BSE could have a relatively limited impact on BSE’s earnings. “While the current regulations do not provide for the self-listing of a stock exchange, NSE would need approval from Sebi to allow its shares to trade on its own platform.”
The brokerage noted that NSE shares could alternatively trade on NSE under the “permitted to trade” category even if they are formally listed on BSE.
“Our sensitivity analysis shows a 1%-2% impact on FY27/FY28E PAT, assuming cash market share does not improve further,” PL Capital said.
The potential move adds another overhang for BSE at a time when the exchange is already facing pressure from weaker derivatives volumes following the introduction of the Closing Auction Session (CAS), higher securities transaction tax (STT) on the F&O segment and tighter bank guarantee norms.
PL Capital expects the impact from NSE’s potential self-trading to remain manageable, but believes slower volume growth and regulatory headwinds warrant more conservative earnings assumptions.
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