The regulator evaluates a structural change in the segment of the shareholding that could significantly influence trade volumes, and by extension, the income of BSE.
The regulatory body is approaching a shift in the market for futures and options (F&O) to longer contracts. Currently, a large part of the options for options in India are concentrated in short -term contracts, in particular weekly expiration date, which encourage rapid sales and speculative behavior.
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Sebi is said to be considering measures to introduce or promote contracts with longer durations.
The aim is to reduce excessive churn and speculation in the retail segment-a segment where, according to Sebi’s own estimates, loses a significant majority of traders in the short term in the short term.
The aim is to push market participants in the direction of more stable, risk-managed strategies instead of treating the F&O market as a short-term lottery.
The regulator’s reasoning is anchored in three primary care:
- Retail protection: Giving data reportedly that a large part of the retail investors, in particular those who loses in a general weekly options, suffer. This is concerned about financial literacy and non -durable trade behavior.
- Better Hedging & Investing: Longer-term contracts are generally more beneficial for cover and investment purposes, making the market more attractive for institutional and long-term players.
- Market quality: The current dominance of ultra-short-dedicated contracts introduces volatility and unpredictability. This contributes to the market that seems overly speculative, a sentiment that Sebi wants to change.
This is not the first regulatory push in this direction. Previous steps such as limiting the weekly expiry date to one index per stock market and re -assigning fare days already influence the trading volumes of derivatives.
The current proposal can, if implemented, deepen that impact.
Why is BSE to lose?
Although the relocation can favor market integrity and protect non -advanced investors, it threatens to dent an important income flow for stock markets. Governments such as BSE earning on transaction -based costs that are closely linked to trade volumes.
The high frequency of transactions in weekly and near-relevant contracts leads to considerable collections.
A shift to long -term contracts can reduce this high -frequency activity, reducing the total income and income of the costs, even if the known exposure remains constant.
For exchanges that are highly dependent on this segment, the impact can be equipment.
This explains the market reaction, which the BSE share price has fallen by 11% in the past month, while investors absorbed the news. The care is that regulatory intervention in one of the most actively traded areas of the activities of the fair could delay the turnover momentum.
What do analysts say?
In the midst of this background, analysts carefully evaluated the prospects of BSE.
Saurabh Jain, Head – Equity Research – Fundamentals at SMC Global Securities, stated: “Although legal changes in the short term yield challenges, BSE’s market leadership and the growing retail participation of India support long -term growth views.
This suggests that although the current headwind could slow the pace of profit, the structural story of BSE remains intact, provided that it continues to adapt and innovate.
From a technical point of view, BSE is currently being traded on RS 2,210, which is broken under the previous consolidation range of RS 2,570 – RS 2,300. The stock shows signs of weakness with persistent sales pressure.
It is currently under the exponential advanced averages of 20 days and 50 days and comes closer to its 200-day EMA-a crucial level that could act as support.
The relative strength index (RSI) is 32.81, which signals over -sold circumstances, but also emphasizes a persistent downward bias.
“On the advantage, a bullish reversal near the 200-day EMA followed by a near RS 2,300 can indicate trend domination, with potential upward goals of 3000-RS 3000-RS 3500,” says Amruta Shinde, research analyst at Choice Broking.
On the other hand, she said that a failure to support RS 2,100 and then RS 1,950 (the EMA of 50 weeks) could lead to further downward risk. Traders are advised to stay on the sidelines until a clearer trend is created.
Outlook on BSE
The potential switch from Sebi to the expansion of derivatives contract needs can re -calibrate dynamics in one of the most traded segments of the Indian market. If implemented, this can reduce Churn and, by extension, a slow growth for trade fairs such as BSE.
Until the clarity of the regulations emerges, the overhang will probably weigh in the short term in the short term.
The voices of the analyst community, however, indicate that the long -term story is supported by robust Fundamentals, technology -guided efficiency gains and the rising tide of retail participation in the Indian markets.
Read also: NSE proposes to roll out the pre-open session for index, stock futures from December 8, after the move of BSE
((Indemnification: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times
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