2 hrs ago
Nuvama Sees BSE Profit Falling as CAS Outcome Looms
Nuvama, a brokerage, thinks BSE may make less profit in the second quarter than in the previous one.
It linked this outlook to lower trading activity under a pricing system called CAS.
A Reuters report said SEBI may stop using CAS for derivatives settlement prices for at least a year.
The report said prices could instead be based on the average price during the last 30 minutes of trading.
Nuvama said BSE’s outlook depends on what the regulator decides.
It rated BSE Hold and gave it a target price of Rs 3,240.
Nuvama also expects moderate growth for some investment businesses because share values have been weak.
It named CAMS and HDFC AMC as its top picks.
Nuvama expects BSE’s second-quarter profit to decline sequentially, citing weaker industry-wide volumes.
The brokerage rated BSE Hold and set a target price of Rs 3,240, implying 1.9% potential upside.
A Reuters report said SEBI may pause use of the CAS framework for derivatives settlement prices for at least a year.
The reported alternative would use the volume-weighted average price during the final 30 minutes of trading.
Nuvama said CAMS and HDFC AMC are its top picks, while muted secondary-market activity may be offset by stronger primary markets for CDSL.
- Who
- Nuvama; BSE; SEBI
- What
- Nuvama expects BSE’s second-quarter profit to fall sequentially and says its outlook depends on the CAS regulation outcome.
- Where
- India
- When
- The assessment concerns BSE’s second quarter; the reported regulatory change may be implemented this month.
- Why
- Nuvama attributed the expected decline to CAS-related pressure on industry-wide trading volumes.
CAS continuation
Reported CAS pause
Derivatives settlement pricing
CAS continuation
The CAS framework was introduced by SEBI in August to set closing prices for key stocks and derivative contracts.
Reported CAS pause
A Reuters report said SEBI is likely to stop using CAS to calculate derivatives settlement prices for at least a year, potentially using the final 30 minutes’ volume-weighted average price instead.
Key facts
- BSE rating
- Hold
- BSE target price
- Rs 3,240
- Potential upside
- 1.9%
- Reported CAS pause
- At least one year
- Reported alternative pricing method
- Volume-weighted average price during the final 30 minutes of trading
- Nuvama top picks
- CAMS and HDFC AMC
- CDSL outlook
- Strong primary markets may offset muted secondary-market activity
Quotes
Nuvama
Brokerage whose note discussed BSE, CDSL, CAMS and HDFC AMC.
“CAS dragged industry-wide volumes with BSE likely to report a sequential decrease in earnings. We reckon investor focus shall remain on sustainability of inflows. We believe CDSL’s stronger earnings are already priced in while BSE’s fate depends on CAS regulation outcome. We reckon CAMS/HDFCAMC are trading at attractive valuations.”
businesstoday.in
Sources
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