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The Securities and Exchange Board of India’s proposed tightening of derivatives trading rules is expected to have a profound impact on stock exchanges, with predicted declines in volumes, revenues, and profitability.
This week is poised to be pivotal for the primary markets, with four initial public offerings (IPOs) lined up to raise a combined total of nearly Rs 12,000 crore. The issuers include Ola Electric (Rs 6,145 crore), FirstCry (Rs 4,194 crore), Ceigall India (Rs 1,253 crore), and Unicommerce eSolutions (Rs 277 crore). Market observers view these IPOs as a litmus test for investor appetite for loss-making and new-age companies. Moreover, this week will be crucial for SoftBank, a prominent backer of Indian startups, with stakes in Ola, FirstCry, and Unicommerce valued at nearly $1.5 billion. Grey market trends suggest a strong performance for all four IPOs, with premiums ranging between 15 per cent and 30 per cent.
Regulatory quake: New derivatives rules rattle financial bedrock
The Securities and Exchange Board of India’s proposed tightening of derivatives trading rules is expected to have a profound impact on stock exchanges, with predicted declines in volumes, revenues, and profitability. However, the market reaction has been surprisingly subdued, with BSE shares up 6 per cent since the announcement. Similarly, National Stock Exchange (NSE) shares, traded in the unlisted market, have only corrected by 5 per cent, according to industry players. This muted response contrasts with analysts’ estimates of a 20–30 per cent impact on BSE and NSE’s 2025-26 earnings. Notably, shares of both BSE and NSE have already fallen around 25 per cent from their peaks earlier this year, suggesting that the market may have been expecting tighter norms and is now waiting to see the actual implementation.
The bull parade: Exchanges sculpt their legacy amid market rally
As markets continue to soar, bulls are basking in the spotlight. In late June, the BSE unveiled a new bull sculpture outside its Mumbai headquarters on Dalal Street, replacing the old one that had become a popular photo opportunity for visitors. Not to be outdone, the rival National Stock Exchange is set to unveil its bull sculpture, currently under wraps but nearing completion. A recent visit to the exchange premises revealed additional sculptures depicting an Indian family and a farmer, symbolising the market rally’s widespread benefits. While the bullish sentiment is welcome, one can’t help but wonder what happens when the bulls eventually lose steam.
First Published: Aug 04 2024 | 11:47 PM IST
