BSE shares surge 4.6% on Motilal Oswal buy call

BSE shares surged 4.59% on Monday, 26 October, after Motilal Oswal upgraded the stock to buy and set the Rs 4,000 target. BSE shares hit an intraday high of Rs 3,379.30 on the National Stock Exchange before trading at Rs 3,370.50 at 12.21 pm. The Rs 4,000 target implies upside of about 23% from the previous closing price. The upgrade came in a brokerage report dated 24 October. It followed a rough August for the exchange, when new trading rules cut activity. The brokerage cited an expected recovery in derivatives volumes after the partial reversal of the closing auction session framework, and possible gains in cash market activity after the listing of the National Stock Exchange.

BSE shares gain on derivatives volume recovery

Motilal Oswal said BSE's futures and options notional average daily traded turnover surged 85% in October 2026 month to date, compared with the 34% month-on-month decline that followed the closing auction session reset in August 2026. The brokerage said the partial reversal of the closing auction session, effective 7 December 2026, gives a regulatory reason for the recovery beyond the current volatility-led rise in volumes. The Securities and Exchange Board of India will restore the last-30-minute volume-weighted average price settlement mechanism for index derivatives from that date. The volume-weighted average price method settles contracts against the average price over the closing window, rather than a single closing price. BSE shares had come under pressure in August after stricter lending norms for proprietary traders took effect in July, followed by the new closing framework.

BSE shares supported by higher volume forecasts

Motilal Oswal expects BSE's fiscal 2027 average daily traded turnover to reach Rs 216 trillion, growth of 16% year on year, with room for higher estimates if the recovery continues. The brokerage noted that BSE has a market share of more than 30% in premium turnover, with scope for further expansion. The premium-to-notional ratio has risen to around 14 basis points from 6-7 basis points in 2023-24, against more than 20 basis points for the National Stock Exchange. Motilal Oswal said further convergence in that ratio, driven by institutional participation and longer-dated contracts, could add to earnings beyond volume growth. The brokerage also raised its revenue estimates for BSE by 8%-10% and its net profit estimates by 10%-12% for fiscal 2027 and fiscal 2028, on stronger trading activity and improving profitability. Reports on the brokerage note also pointed to the Star MF mutual fund platform, which processes 245 million transactions a quarter, and a co-location business earning roughly Rs 48 crore a quarter.

BSE shares outlook after August slump

The recovery gathered pace through the autumn. September saw a 6% month-on-month rise in volumes, and October brought a stronger rebound as market volatility lifted trading. Motilal Oswal cautioned that volatility may have contributed to the October jump, and said a sustained recovery, rather than a short spike, will matter for the earnings outlook. The brokerage expects the recovery in derivatives volumes, improving market share and growth in other businesses to support BSE's earnings growth. The cash market could also gain if the National Stock Exchange listing lifts activity, and reports on the note put the cash market share at 9%, up from 7%. BSE shares closed the morning session higher, with the upgrade giving investors a fresh reason to back the exchange after the August setback.