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Informist, Monday, Sept. 15, 2025

MUMBAI – Nuvama Institutional Equities expects BSE's average daily premium turnover to fall 55.8% to INR 66 billion in 2026-27 (Apr-Mar), if the Securities and Exchange Board of India allows different day fortnightly expiry. This will results in a cut in earnings per share by 26.8% to INR 39.9 for 2026-27 (Apr-Mar). It also expects NSE's average daily premium turnover to decline 46.1% to INR 261 billion, resulting in FY27 EPS cut of 24.7% to INR 32.4.

For BSE, the distribution of option premiums across expiry day is similar for both weekly and monthly contracts, which will half the average daily premium turnover earned in four-weekly expiries per month, Nuvama said. It estimates the market average daily premium turnover to drop over 48% to INR 327 billion and BSE to have a market share of 20.1%. BSE's expiry-day turnover share has reduced to 44% from 84% in Apr-Oct 2024, which is still higher than NSE's share of 21%. 

"We believe that the most likely scenario is for SEBI to allow only fortnightly expiries," Nuvama said. In this, the decline in average daily premium turnover for NSE is less severe since its expiry concentration is lower than that for BSE, it said.

Chairman Tuhin Kanta Pandey told a press conference Friday that the SEBI will soon issue a consultation paper seeking comments about ending the weekly expiry of derivatives contracts. This comes amid news of the SEBI exploring a proposal to end weekly expiry contracts in equity derivatives trading.

In a different day monthly expiry scenario, Tuesday and Thursday, Nuvama expects the average daily premium turnover market to fall by 66.8% to INR 210 billion in FY27, and projects BSE to have a market share of 15.9%. "We expect BSE's FY27 average daily premium turnover to suffer a massive hit of 77.5% to INR 33 billion, resulting in a cut of 36.7% in FY27 EPS to INR 34.5," it said.

As monthly contracts have deeper market participation, the reduction in the average daily premium turnover for NSE under one monthly expiry scenario would be less severe than for BSE, the broking firm said. It expects NSE's average daily premium turnover for FY27 to reduce by 63.5% to INR 177 billion, resulting in a cut of 34% in FY27 EPS to INR 28.4. 

In case of an alternative to only a monthly expiry, the brokerage expects BSE to have a mid-month expiry, while NSE will have an end-of-the-month expiry, with the same expiry day. It expects the average daily premium turnover market to reduce by 54% to INR 291 billion by FY27, with BSE improving its market share to 27.5%. "If only mid-monthly expiry is allowed for BSE and monthly expiry for NSE, we expect BSE's average daily premium turnover to reduce 46.3% to INR 80 billion by FY27, resulting in a 19.8% cut in EPS to INR 43.7. We expect NSE's average daily premium turnover to reduce 56.4% to INR 211 billion by FY27, resulting in a 29.9% cut in EPS to INR 30.2," the brokerage said.

In a same day fortnightly expiry scenario with the same day of expiry, either Tuesday or Thursday, it expects the average daily premium turnover market to shrink 47.6% by FY27, and BSE to have a market share of 15.2%. It sees NSE to have a market share of 85%. "We expect BSE's average daily premium turnover to shrivel 66.3% to INR 50 billion, resulting in a 32% cut in EPS to INR 37 by FY27. We expect NSE's average daily premium turnover to reduce by 41.9% to INR 281 billion, resulting in a 22.4% cut in EPS to INR 33.4."

Similarly, in a same day monthly expiry with same day for both exchanges, Nuvama expects the average daily premium turnover market to reduce by 54.1% to INR 291 billion by FY27 and BSE to have a market share of 9.8%. In this scenario, BSE's average daily premium turnover will shrink 80.8% to INR 29 billion, resulting in an 38.5% cut in FY27 earnings per share to INR 33.5.

The brokerage estimates NSE's average daily premium turnover to reduce by 45.8% to INR 262 billion by FY27, resulting in a 24.2% reduction in FY27 earnings per share to INR 32.6. Given NSE has greater market depth as well as greater monthly volumes than weekly, Nuvama sees NSE to have a market share of nearly 90%.

To offset the impact of any reduction in volume, exchanges may increase charges. To offset the impact of any reduction in volume, exchanges may increase charges. Currently, NSE charges INR 3,500 per INR 10 million of premium turnover, but it used to charge as high as INR 7,500 per INR 10 million during FY13 and INR 5,500 per INR 10 million during FY17. The broking firm expects the total market size to shrink in any move to increase the tenure of equity derivatives and will have a different earnings impact on exchanges, which will lead to a re-rating of the stock. A fall in the total market size will drag down earnings growth potential for both exchanges, Nuvama said. 

In a nutshell, the brokerage expects the FY27 earnings estimates for BSE to decline in a range of 19.8% to 38.5%. For now, it has maintained a 'buy' rating on BSE with a target price of INR 2,820.  End

Reported by Simran Rede

Edited by Akul Nishant Akhoury

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