Shares of BSE Ltd. surged over 14% on March 28 after the National Stock Exchange (NSE) postponed its plan to shift derivatives expiry days, following an advisory from the Securities and Exchange Board of India (SEBI) to maintain the status quo. The rally comes after concerns that NSE’s proposed shift of weekly, monthly, and quarterly derivatives expiries from Thursday to Monday could impact BSE’s trading volumes.
SEBI’s recent consultation paper proposed that expiry days remain on Tuesday or Thursday, prompting NSE to hold off on its planned change. “SEBI, in a letter to exchanges, has advised not to proceed with the plans to change expiry days and maintain the status quo for now,” a source revealed. A formal NSE announcement is expected soon.
This decision offers temporary relief for BSE, which saw its stock tumble 9% when NSE first announced its intention to alter expiry dates. Investors had feared that shifting expiry days could drain liquidity from BSE, as its Sensex options currently expire on Tuesdays.
BSE has reiterated that its financial performance depends on multiple factors, including trading volume, the number of new listings, capital raised, and market activity. While the recent rally is a positive sign, investors must assess the stock’s valuation before making investment decisions.
Is BSE Stock Overvalued?
According to InvestingPro’s fair value feature, BSE’s intrinsic value is estimated at INR 3,796.4 per share, indicating a potential 28.4% downside from the current market price of INR 5,311. This advanced valuation tool utilizes multiple financial models to derive a realistic price, helping investors gauge whether a stock is overvalued or undervalued.
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