Tale of the Tape 

Good evening everyone. Markets were boring! 

Nifty (-0.3%) and Sensex (-0.4%) were stuck in a sideways trend before closing slightly lower. Midcaps (-0.2%) were also down, while Smallcaps ended flat. The advance-decline ratio was evenly split.

Most sectors ended in the red. Auto (-1.3%) and IT (-1.2%) got whacked. Meanwhile, Real Estate (+0.6%) saw the most buying. 

Is BSE (-5%) a little too overhyped? Read our top story for a dose of caution and a look at why Jefferies has downgraded the stock. 

HDFC AMC (+6%) hit a record high on great Q2 results. On the other hand, KEI Industries slumped -7% despite okay-ish quarterly numbers. More details below.

Cochin Shipyard, Amber Enterprises and PNC Infratech saw big moves today. Check out their charts below to find out why.

Idea rose +3% intraday after Kumar Mangalam Birla expressed confidence about its turnaround. This sums up our emotions

Akums Drugs (+5%) gained after signing a licensing deal with Canada’s Triple Hair for its patented products.

Aditya Birla Real Estate (+2%) was in focus after Nomura initiated coverage; the brokerage sees a cool +27% upside from current levels.

Results reaction. Rallis India zoomed +12% after its net profit jumped +20% YoY. South Indian Bank gained +6% after reporting a strong improvement in asset quality.

Adani Energy Solutions was up +3% intraday after acquiring two electrical utilities companies (Navinal Transmission and JTL projects) for an undisclosed sum.

Here are the closing prints:

Stock
Has BSE Topped?

One of the biggest stories of India’s bull rally is how the casinos enabling all of it have been absolutely ROLLING in money. Yes, investors are richer. But so are brokerages, market intermediaries and stock exchanges. The biggest winner has been BSE which has more than tripled in the last year. But with eye-watering valuations, is the party over? 

The biggest growth trigger, which is currently being debated, is the impact of SEBI’s new F&O rules. BSE has +2x since the release of the new framework as analysts believe BSE will steal market share away from NSE over the whole only ‘one derivative contract expiry per week’ rule. ICYMI - NSE has dumped Nifty Bank for Nifty. This is HUGE considering Nifty Bank contributes to ~50% of NSE’s option premium volumes.

So will the BANKNIFTY fans move to BSE’s weekly contract? The thing is, nobody really knows. And even if they do, they certainly don’t know by how much. Experts say BSE’s current valuation (a P/E of 40x FY26E) implies it will have a 40%-50% share in weekly contracts, which may be overambitious. To be clear, BSE will benefit, but be ready for a correction if things don’t pan out that way when the new rules kick in from November.

Finally, Jefferies says investors are ignoring other smaller negatives including the removal of calendar spreads, upfront margin collections which could also have an impact on volumes, including BSE’s weekly Sensex product!

TL;DR: SEBI’s new derivatives rules may not benefit BSE as much as the market has priced in so far. Long-term things still look good, but valuations may be a little stretched in the short-term FYI - Jefferies has downgraded the stock to ‘underperform today’. 

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