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Informist, Monday, Mar. 10, 2025

By Alina Geogy

MUMBAI – Worries about competitive pressure and loss of market share have dented market sentiment towards listed stock exchange BSE after the rival National Stock Exchange announced that its derivative contracts would expire a day before derivative contracts on the BSE. These concerns pushed traders to add short positions to the futures and options chain of BSE Monday.

The NSE changed the expiry of weekly and monthly derivatives contracts of indices and stocks to Monday from Thursday. The change takes effect from Apr. 4. Shares of BSE closed lower in all four sessions after the NSE's announcement, with a decline of 10% over this period. The change in expiry day may moderate BSE's market share to around 18%, from 22% in February, Nuvama Institutional Equities said in a report Sunday.

Monday, the stock fell almost 5% to a five-month low of INR 3,976.05, before closing at INR 3,998.95, 4.3% down. The selling pressure made it the fourth-worst-hit stock in the Nifty 200 index. Premiums on the most active call options of BSE expiring this month fell 50-66%. For the call options, the maximum addition of open interest was at INR 4,200 strike price. The highest open interest was at INR 5,000 strike price. On the puts side, the strike price of INR 4,000 saw maximum addition of open interest. The highest open interest was at INR 3,600 puts.

Nuvama slashed the stock's target price to INR 5,160 from INR 7,250 earlier, citing heightened competitive intensity, uncertainty on incremental regulatory changes, and reduced estimates for earnings per share. However, it retained the 'buy' rating. The NSE's decision to change the expiry day would lower volumes for the industry as trading avenues for retail traders, who are typically more active closer to expiry when option values compress, will reduce, Nuvama said in the report. Additionally, the Securities and Exchange Board of India's proposal to shift to a delta-based open interest calculation for index derivatives may hurt volumes if implemented in the current form.

BSE's index option premium market share had shot up to 22% in February from 16% in December, mainly due to the exchange revising the expiry day to Tuesday from Friday, the brokerage said. In January itself, 23% of premium turnover for Sensex was recorded one day before expiry, sharply higher than 3.5% during Apr–Oct, it said. This is primarily attributable to BSE index option expiry Tuesday, before NSE's expiry Thursday, it said. Now, with the NSE expiry day just one day ahead of BSE's, BSE's potential to capture premium on non-expiry days is likely to reduce and hence overall market growth may suffer, the brokerage said.

Monday, the Nifty 50 closed at 22460.30 points, while the March futures contract of the index closed at a premium of 47.60 points to it. Open interest in the contract fell 1.4% to 17.81 million, according to provisional data.

--Nifty 50 Mar closed at 22507.90, down 142.05 points
--Nifty 50 Apr closed at 22650.00, down 147.30 points; 189.70-point premium to spot index

--Nifty 50 May closed at 22767.95, down 139.95 points; 307.65-point premium to spot index

The most active underlying stocks on the National Stock Exchange were IndusInd Bank, Reliance Industries, HDFC Bank, BSE, Bajaj Finance, Dixon Technologies India, Infosys, ICICI Bank, Hindalco Industries, Tata Power Co., and Bharat Electronics.  End

Edited by Rajeev Pai

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