Bernstein’s latest analysis highlights a clear preference for Multi Commodity Exchange of India over BSE, citing moderating equity derivatives growth and expanding commodity participation as key factors shaping future market trajectories.
Bernstein has opened coverage on two of India’s best-known exchanges with a clear preference for Multi Commodity Exchange of India over BSE, arguing that the long stretch of rapid growth in equity derivatives is likely to cool while commodity derivatives enter a broader phase of participation.
The brokerage assigned MCX an “outperform” rating with a target price of ₹3,830, which implies about 15% upside from its September 7 close of ₹3,330. BSE was rated “underperform” with a target of ₹2,820, suggesting roughly 18% downside from ₹3,446. Bernstein’s view rests on the expectation that equity derivatives, which have been a powerful engine for exchange revenues, will face a more difficult comparison base in the coming financial years.
In Bernstein’s view, equity options volumes may rise only about 5% year on year in FY27, sharply slower than the 31% growth seen in the first quarter. Lower market volatility, tighter leverage rules for proprietary trading desks, disruption linked to the new closing auction session and a high base from FY26 are all expected to weigh on activity. The brokerage said the auction-related pressure should fade by October, but tighter leverage norms could continue to restrain volumes through the second half of FY27.
For BSE, Bernstein sees market share gains continuing through FY27 before peaking towards the end of the year. The exchange has lifted its equity options share from almost nothing to about 33% in five years, but Bernstein expects revenue growth to start moving more closely in line with overall market expansion from FY28. It also values BSE at about 32 times FY28 earnings per share and said growth could normalise to the mid-teens in FY28 and FY29 as volumes mature.
MCX, by contrast, is seen as benefiting from a much smaller starting base in commodities, leaving room for participation to broaden. Bernstein pointed to a four-fold year-on-year jump in July contracts, a further 2% rise in August from July and continued strength in September. It also noted strong momentum in commodity options, which were up 4.3 times year on year, while futures rose 2.1 times.
The brokerage expects more retail equity traders to migrate into commodities as brokers diversify revenue streams, with possible support from wider foreign portfolio investor participation and proposed changes to margin rules. It is also 10% to 12% ahead of consensus on MCX’s FY27 and FY28 earnings, while running 2% to 4% below consensus for BSE, underscoring its belief that the two stocks are likely to diverge as growth normalises in equities and improves in commodities.
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