BSE hits 52-week, surges 13% on heavy volumes

The board of directors of BSE Ltd, on July 6, approved a share buyback of up to Rs 375 crore at Rs 816 per share

Shares of BSE Limited hit a 52-week high of Rs 787.95 as they rallied 13 per cent on the National Stock Exchange (NSE) in Wednesday's intra-day trade on the back of heavy volumes.

At 02:35 pm, BSE was quoting 9 per cent higher at Rs 762.35, as against 0.09 per cent gain in the Nifty 50 index. Around 9.03 million shares have, so far, changed hands on the counter, exchange data shows.

The board of directors of BSE Ltd, on July 6, approved a share buyback of Rs 375 crore via tender route at Rs 816 per share. The buyback offer price is at a premium of 34.09 per cent over the closing price of the stock on NSE on June 30, 2023 -- the day preceding the date when intimation for the board meeting was sent to the Stock Exchange.

In the past one month, the stock has surged 38 per cent as compared to 4.7 per cent rise in the benchmark index.

June, 2023, was a strong month for BSE as cash average daily trading volume (ADTV) increased 39 per cent month-on-month (MoM) to Rs 5,200 crore while derivatives volumes, which were non-existent between January 2023-May 2023, have risen to Rs 99,800 crore (ADTV on notional basis). BSE improved its cash market share from 5.5 per cent in April 2023 to 5.8 per cent in May 2023, and 7.6 per cent in June 2023.

The BSE has also made notable changes in derivative products including contract size and expiry day. This has led to traction in derivatives (Rs 1 trillion ADTV in Jun’23) and could grow further given the small base. Cash volumes and MF platform orders maintain strong momentum.

"Increase in the core multiple captures the upside potential that BSE could manage in its equity derivatives market share and any momentum in capital markets. Earnings from Gift City operations is an additional optionality. CDSL stake sale resulted in higher cash on balance sheet, which is being used for buyback," analysts at ICICI Securities said.

According to the brokerage firm, the new initiatives undertaken by BSE can cement higher volumes and profits going ahead. With effect from March 1, 2023, BSE has revised the tick size for scrips trading below Rs 100 to 0.01 per tick instead of 0.05 per tick.

With effect from May 15, 2023, lot size for futures and options contracts of Sensex has been reduced to 10 from 15 earlier. For Bankex index, the lot size for futures and options has been changed to 15 from 20, along with the change of the expiry day of its monthly, weekly and long-dated futures and options contracts to Fridays from Thursdays. This will increase product liquidity and create differentiation with NSE.

BSE has stopped the LES (liquidity enhancement schemes) in equity and commodity derivatives; this will likely result in savings of Rs 32 crore on standalone basis and Rs 38 crore on consolidated basis, the brokerage firm said.