BSE Shares Surge 5% After Jefferies Raises Target Price; Should You Invest? – News18
Last Updated:
Goldman Sachs cautioned that with valuations nearing all-time highs, BSE’s pricing appears in line with global peers; Should you invest?
BSE shares jump
Shares of BSE Ltd, Asia’s oldest stock exchange, rose by 4.9% on Tuesday, reaching Rs 5,408.95 on the National Stock Exchange (NSE) after brokerage firm Jefferies upgraded its rating on the company to ‘Hold’ from ‘Underweight’ and significantly raised its target price to Rs 5,250 from Rs 3,500.
The revised target implies a modest upside of 2% from Monday’s closing levels.
Jefferies highlighted that earnings for exchanges are likely to be upgraded, though brokers may need to raise prices to adapt to the changing market conditions.
The Securities and Exchange Board of India (SEBI)’s new F&O measures have notably impacted option volumes, with a 70% decline in the number of contracts. However, premiums in January (month-to-date) have dropped by less than 10%, which is an improvement compared to Jefferies’ earlier projection of a 25% decline.
Interestingly, the average ticket size for the industry has tripled in the second week of January 2025, compared to November 2024, following the increase in lot sizes.
Despite this, discount broking volumes could decline by over 40%, requiring substantial price hikes to offset the impact, according to Jefferies.
In a similar vein, Goldman Sachs recently initiated coverage on BSE with a ‘Neutral’ rating and a target price of Rs 5,060. Goldman Sachs believes BSE will benefit from strong growth in India’s equity capital markets, supported by robust nominal growth in the earnings of Indian listed companies.
However, Goldman Sachs cautioned that with valuations nearing all-time highs, BSE’s pricing appears in line with global peers, making the risk-reward outlook fairly balanced.
Currently, BSE has a market capitalization of Rs 69,691.75 crore. On the technical front, the stock is neither in the ‘overbought’ nor ‘oversold’ zone, with its Relative Strength Index (RSI) at 46.8. An RSI reading below 30 is considered oversold, while above 70 is considered overbought.
Among the nine analysts covering BSE, five have a ‘Buy’ recommendation, three have a ‘Hold’, and one recommends a ‘Sell’.
BSE shares closed 0.51% higher on Monday at Rs 5,148. The stock has surged 130% over the past year.
