Jefferies says Sebi’s proposed CAS modifications will take away uncertainty, however nonetheless stays adverse on BSE. Right here’s why
On Saturday, Sebi proposed two choices for figuring out expiry-day settlement costs for index and inventory derivatives. The session paper additionally proposed modifications to the timing of the continual buying and selling session (CTS), CAS and derivatives buying and selling, together with further measures to enhance the brand new session.
Jefferies on Monday highlighted that CAS, which was launched by Sebi in August, initially resulted in larger losses for home prop merchants as a consequence of volatility in index costs over the past hour on expiry day. Sebi’s newest session paper addressed considerations round CAS by altering settlement value of derivatives to quantity weighted common (VWAP) or a mix between VWAP and CAS, discontinuing cancellations of restrict orders positioned past +/- 1% of reference value throughout CAS, lowering considerations round manipulation of settlement value, and unexecuted iceberg orders could also be transitioned to CAS, rising liquidity throughout the CAS window, the worldwide brokerage mentioned.
Additionally learn | Sebi proposes new CAS framework, two choices for expiry-day settlement
“Our discussions with home prop merchants point out the return to VWAP-based by-product settlement value together with lack of ability to cancel restrict orders positioned past +/-1% threshold ought to cut back finish of interval volatility on expiry days,” Jefferies mentioned, noting that the final date to submit responses to Sebi’s session paper is October 3, so the implementation will seemingly be from October or November this yr.
Whereas choices premium turnover and orders had been adversely impacted throughout August 2026, each have recovered in September as far as possibility merchants had a greater understanding of CAS, in keeping with the analysts.
Why Jefferies stays adverse on BSE share value?
Regardless of its optimistic view on the most recent proposals on CAS, Jefferies stays adverse on BSE. It maintained its ‘Underperform’ score on the shares of Asia’s oldest inventory trade, with a goal value of Rs 2,940 apiece, implying greater than 13% draw back potential from the inventory’s earlier closing value of Rs 3,384 apiece.The worldwide brokerage’s adverse stance on BSE shares is pushed by the general choices trade barely rising over the previous two years, whereas market-share positive factors seem like nearing a ceiling, with expiry-day Sensex and Nifty ADTO now at comparable ranges.
Additional, RBI’s tightening of financial institution assure norms might adversely influence premium turnover by as much as 10% over the following yr, it mentioned, including that BSE may also doubtlessly bear a administration transition by June 2027.
Additionally learn | Defined: What Sebi’s proposed CAS modifications imply for expiry-day buying and selling and settlement
Why Jefferies prefers Groww share value?
Jefferies thinks Groww is a greater approach of enjoying India’s fairness story. It must also profit from CAS points being resolved as F&O accounts for round 55% of the corporate’s revenues, it mentioned. “We consider the corporate has a number of levers to drive 30% PAT CAGR over FY26-29,” Jefferies mentioned, including that’s pushed by an 18% development in broking enterprise led by consumer classic and market share positive factors, new initiatives like margin buying and selling facility and wealth administration, and 10pp margin growth.
Additional, Groww is including US shares later in FY27, which the worldwide brokerage estimates might add 5-9% to FY28 earnings. Jefferies has a ‘Purchase’ name on the shares of Groww-parent Billionbrains Storage Ventures and a goal value of Rs 240 apiece, implying almost 20% upside potential from the inventory’s earlier closing value of Rs 200.24 apiece on NSE.
What’s CAS?
Inventory exchanges launched the brand new CAS system from August 3, altering the best way closing costs are calculated for shares included within the futures and choices (F&O) phase. Underneath CAS, steady buying and selling in shares that even have F&O contracts ends at 3:15 pm. Nonetheless, this doesn’t imply these shares are closed for the day quarter-hour earlier than the broader market shuts.
From 3:15 pm onwards, these shares transfer into the CAS, a 20-minute public sale course of that runs till 3:35 pm to find out their official closing costs. In the meantime, shares that aren’t a part of the F&O phase proceed to commerce as common till 3:30 pm.
Through the 20-minute public sale window, purchase and promote orders for eligible shares are collected and matched at a single equilibrium value. This mechanism is geared toward bettering value discovery and lowering the influence of last-minute trades on closing costs.
Additionally learn |Jefferies’ 25% CAGR membership: Paytm, Groww amongst 5 monetary shares that may ship as much as 25% returns
Disclaimer: This text has been written by Debaroti Adhikary, who shouldn’t be a SEBI-registered Analysis Analyst or an Funding Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as outlined below Part 2(77) of the Firms Act, 2013) don’t maintain any monetary curiosity within the firms talked about on this article as of the date of publication. The views/suggestions talked about on this article, wherever relevant, are these of the respective SEBI-registered Analysis Analyst/brokerage and have been reproduced/reported with due attribution. They shouldn’t be construed because the views or suggestions of The Financial Instances Digital or the journalist. Readers are suggested to think about the unique analysis report and make their funding choices based mostly on their very own evaluation. Brokerage disclaimers right here.
