BSE shares jump 5% after Jefferies raises target price; Should you invest?

Last update:January 14, 2025, 11:18 AM IST

Goldman Sachs warned that with valuations near all-time highs, the BSE price appears in line with its global peers; Should you invest?

BSE stocks jump

Shares of BSE Ltd, Asia’s oldest bourse, rose 4.9 per cent on Tuesday to Rs 5,408.95 on the National Stock Exchange (NSE) after brokerage Jefferies raised its rating on the company from “Underweight” to “Hold” and significantly raised its rating. indicative price at Rs 5,250 against Rs 3,500.

The revised target implies a slight 2% upside from Monday’s closing levels.

Jefferies stressed that exchange profits would likely improve, although brokers might have to raise prices to adapt to changing market conditions.

The new F&O measures from the Securities and Exchange Board of India (SEBI) notably impacted options volumes, with a 70% drop in the number of contracts. However, premiums in January (month-to-date) fell less than 10%, an improvement on Jefferies’ earlier forecast of a 25% decline.

Interestingly, the average ticket size for the industry tripled in the second week of January 2025, compared to November 2024, following the increase in batch sizes.

Even so, discount brokerage volumes could decline by more than 40%, requiring substantial price increases to offset the impact, according to Jefferies.

On a related note, Goldman Sachs recently initiated coverage on BSE with a ‘Neutral’ rating and a price target of Rs 5,060. Goldman Sachs believes that BSE will benefit from strong growth in equity markets Indian companies, supported by solid nominal profit growth of listed Indian companies.

However, Goldman Sachs warned that with valuations near all-time highs, the BSE price appears in line with its global peers, making the risk-reward outlook quite balanced.

Currently, BSE has a market capitalization of Rs 69,691.75 crore. On a technical level, the stock is neither in the “overbought” nor in the “oversold” zone, with its Relative Strength Index (RSI) at 46.8. An RSI below 30 is considered oversold, while an RSI above 70 is considered overbought.

Among the nine analysts who cover the BSE, five recommend buying, three recommend holding and one recommend selling.

BSE shares closed 0.51% higher on Monday at Rs 5,148. The stock has surged 130% in the last one year.