Prabhudas Lilladher Lowers BSE Target Price to Rs 4,025 Amid CAS Impact on Derivatives Volumes.

Prabhudas Lilladher has maintained its buy rating on BSE while reducing the target price to Rs 4,025 from Rs 4,850. This adjustment is primarily attributed to the negative impact of the newly implemented Closing Auction Session (CAS), which has resulted in a noticeable decline in derivatives volumes. Alongside tightening bank-guarantee requirements and an increase in the Securities Transaction Tax (STT) on futures and options transactions, these regulatory changes are expected to hinder BSE’s short-term growth trajectories. Despite these challenges, the brokerage remains optimistic about BSE’s long-term market positioning and growth potential.

Currently, BSE shares are under pressure, trading around Rs 3,316, reflecting a decline of 6.61% over the past month, in stark contrast to the 3.36% gain of the Nifty Midcap 50 index. The weak performance is attributed to multiple regulatory headwinds, including diminished activity in derivatives trading—where volumes dropped by approximately 6% month-on-month in August 2026 following the CAS implementation. The dropout of proprietary and high-frequency traders further indicates a shift in market dynamics, as their participation fell from 65% to 60% during the current year-to-date period.

Despite the current regulatory challenges impacting trading volumes, Prabhudas Lilladher anticipates that BSE’s index options volumes could still exhibit growth of 23% year-on-year for FY27 and 20% for FY28. However, these projections are contingent on maintaining the existing run rates amidst the ongoing regulatory pressures. The brokerage has also revised profit estimates downward by 2%-6% for FY27 and FY28, reflecting the anticipated slowdown in derivatives activities. Key earnings per share estimates have subsequently been adjusted as well, highlighting the impact of regulatory concerns on BSE’s financial outlook.

Source: The Economic Times

(Expert Note: This intelligence brief was structured and verified by the Wealthova editorial desk.)