Shares of BSE dropped around 3% on Tuesday, extending losses for the fifth consecutive session after Nuvama downgraded the stock’s rating to Hold from Buy, and slashed its target price, listing three key headwinds converging in FY27.

BSE shares dropped to Rs 3,235 apiece on Tuesday morning, the lowest level seen by the stock in around five months. Shares of the stock have now fallen more than 10% over five consecutive sessions of losses.

Nuvama on BSE share price

Nuvama downgraded its rating on the shares of BSE to ‘Hold’ and slashed its target price to Rs 3,240 apiece from Rs 4,090 apiece. The latest target price implies around 3% downside potential from the stock’s previous closing price of Rs 3,332 apiece.

The brokerage highlighted three headwinds for the stock exchange that converge in the ongoing financial year 2027. Here are the 3 key headwinds.

1) CAS has reset volumes, impairing expiry-day decay trading dynamics

The newly introduced closing auction session (CAS) has led to huge confusion among traders, resulting in lower participation. Nuvama highlighted that BSE’s index option premium volumes (ADPTV) of Rs 18,100 crore are the lowest since January 2025.

The premium per contract, which had spiked 54% to Rs 2,605 in the first week of August, has fully unwound, and premium-to-notional is back to 11.1 bps versus 10.9 bps in July, it added, noting that the key issue is lower trading velocity and participation loss.
“Earlier, option premiums decayed predictably into expiry, enabling repeated participation through short duration trades. CAS introduces uncertainty in final settlement due to auction-based closing, reducing the predictability of this decay path. This weakens theta-harvesting strategies and reduces leverage for buyers that previously relied on rapidly falling premiums, and reduces seller interest due to uncertainty of option decay—impacting a large part of the ecosystem,” Nuvama said.The damage is visible as BSE expiry-day contracts fell 33% versus 24% for non-expiry, the brokerage highlighted.

2) Bank guarantee norms are second leg

RBI’s bank guarantee norms are the second leg, and they arrive precisely as CAS impact could heal, according to Nuvama. Tighter collateral requirements may raise capital intensity for intermediaries, reducing turnover efficiency in high-frequency strategies that drive contract volumes, it added.

The brokerage feels that the impact is likely gradual but could cap recovery into FY28.

3) Market share gains are nearing saturation

Nuvama highlighted that BSE’s contract share of nearly 51.5% is already high, but ADPTV’s share remains lower at around 36%, due to a lower mix of non-expiry-day contribution. This is limiting incremental upside from further share gains, according to the brokerage.

“With contract MS at 50% and incremental levers exhausted, we see no near-term trigger. The gap to ADPTV share of 36.3% is structural due to higher concentration near expiry,” it further said.

Nuvama cut BSE’s EPS estimates by 6.3% for FY27 and 15% for FY28. However, it sees a recovery in VIX as the largest swing factor, suggesting that a move in VIX towards 16–18 could materially lift premium per contract and ADPTV even without a recovery in contracts.

Faster-than-expected adaptation to CAS, deeper closing-auction liquidity, regulatory recalibration of CAS mechanics, and stronger non-expiry participation could also drive volumes above Nuvama’s revised assumptions.

Jefferies on BSE share price

Nuvama’s downgrade comes a day after Jefferies downgraded the counter to ‘underperform’ from ‘hold’ and trimmed the target price to Rs 2,940 from Rs 3,520.

Jefferies flagged risks to BSE’s revenue from domestic proprietary traders, who account for around 50% of notional turnover. It sees headwinds from the STT hike, RBI’s bank guarantee norms and the Closing Auction Session (CAS).

Also read | BSE shares tumble 5% after Jefferies downgrades stock to ‘underperform’. Here’s why

BSE share price

BSE shares have fallen over 9% in a week and 8% in a month, although the stock is overall up 25% in 2026 so far. After hitting a 52-week low of Rs 2,021.50 apiece in September last year, BSE shares more than doubled in eight months to hit a 52-week high of Rs 4,447 apiece in May this year. The stock has now fallen more than 27% since then to trade at Rs 3,235 apiece on Tuesday morning.

In the longer term, BSE shares have delivered stellar returns of 1,038% in three years and more than 2,500% in five years. The company has a market capitalisation of more than Rs 1.3 lakh crore.

Also read | Paytm block deal: Vijay Shekhar Sharma’s Resilient Asset likely sells nearly 2 crore shares worth Rs 2,949 crore

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

The number of job vacancies has fallen to its lowest level in more than five years as smaller businesses cut back on recruitment, the latest official figures indicate.

Vacancy numbers dipped slightly over the May-to-July period to 707,000, according to the Office for National Statistics (ONS), which said small firms were citing labour and operating costs as reasons for scaling back hiring.

The ONS said the labour market was “little changed overall”, with the unemployment rate remaining at 4.9%.

Growth in regular earnings – which excludes bonuses – picked up slightly, rising at an annual pace of 3.5% in the three months to June.

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Labour councillor Rosy Moore, from Cambridge City Council, which is the lead authority, said: “We’ve been so successful that all of our [grant] money is booked to be spent, as it were, that’s all in the pipeline.

“So we’ve actually written to the department and asked if they could extend it for us because our partnership is working so well.”

Brain said he learned of the scheme through a representative at the door.

“We were very sceptical, but we went online and we checked them out, and then we checked whether it was a legitimate thing through the government website,” he said.

“We registered, and then we got a call from a contractor that had been appointed, they came and did a survey, and we were still very, very sceptical, but we worked through the process.

“They answered the questions. There was no hard sell or a hard push, and because they’d satisfied my scepticism, we went ahead.”

Asked if he thought it was too good to be true and a scam, Brain said: “All the way through, to be honest with you… it was only at the end, once the process had been done and they’d sent me the handover package, that I thought, ‘Well, you know, it does seem too good to be true, but you know, we were a beneficiary from it, thankfully.’”

Mumbai: ICICI Bank, which has drastically narrowed its valuation gap with HDFC Bank this year, has emerged as the most valued stock holding in mutual fund (MF) portfolios in July, ending a three-year run at the top for India’s biggest lender by market value.

Mutual funds currently hold around 3.94 billion shares of HDFC Bank, valued at ₹2.96 lakh crore, while their holding in ICICI Bank stands at around 2.10 billion shares, valued at ₹3.01 lakh crore.

ICICI Bank now accounts for 5.35% of equity MF holdings, compared with 5.24% for HDFC Bank. As of July, 514 MF schemes held shares of HDFC Bank, while 552 schemes held shares of ICICI Bank.

ICICI Bank’s portfolio-topping surge isn’t merely a reflection of institutional investors exiting HDFC Bank. Rather, it reflects lingering concerns over executive leadership succession and governance that remain key valuation drags for the country’s biggest private-sector lender. “HDFC Bank has faced governance concerns following the resignation of its chairman, while there have also been concerns around certain events and the recent fine imposed on the CEO,” said Siddharth Rajpurohit, lead analyst, Banking, Systematix Group. “Although the bank conducted an internal review through an independent agency, some concerns remain.”

HDFC Bank had remained the top MF holding since July 2023 until June this year. The value of MFs‘ holding in HDFC Bank had hit a record high of more than ₹3.39 lakh crore in November 2025.

Contrasting Fortunes
The shift captures the contrasting stock performance of the two lenders. HDFC Bank fell 6.2% in July and is down 25% so far in 2026 amid concerns over profitability pressures, governance and succession, triggering record selling by foreign investors. The Street is concerned about leadership succession at HDFC Bank. Incumbent Chief Executive Sashidhar Jagdishan‘s second term is due to end in October, and the lender’s board is evaluating his reappointment, the bank’s leadership said last month during a post-earnings call.

ICICI Bank, meanwhile, has had a steadier run, and its stock gained 4.4% in July and 7% so far this year. “In contrast, ICICI Bank delivered a stable set of results and does not face similar governance concerns. The extension of the tenure of its MD and CEO by another two years also provides greater clarity on management continuity.” Rajpurohit said.

However, MFs have continued to increase their holdings in both lenders. Their collective stake in HDFC Bank currently stands at around 30.04%, up from 26.7% at the end of December 2025 and around 24% at the end of December 2024. In ICICI Bank, MF holding has risen to around 29.6% from 26.09% at the end of December 2025. Overseas fund ownership, by contrast, has reduced.

Reliance Industries is the third-most valued stock holding of MFs, with holdings worth around ₹1.75 lakh crore, accounting for 3.1% of equity assets under management (AUM). Bharti Airtel and Axis Bank rank fourth and fifth, with MF holdings of around ₹1.47 lakh crore and ₹1.3 lakh crore, respectively. They account for 2.6% and 2.3% of equity AUM, respectively.

Slim M-Cap Lead

To be sure, HDFC Bank remains the larger lender by market capitalisation. HDFC Bank’s current market capitalisation stands at ₹11.21 lakh crore, compared with ₹10.18 lakh crore for ICICI Bank, although the valuation gap has narrowed significantly so far this year. The underperformance has resulted in HDFC Bank’s valuations trading lower than ICICI.

HDFC Bank is trading at an estimated price-to-book ratio of 1.78 times, compared with 2.43 times for ICICI Bank.

Both stocks are trading below their respective five-year average price-to-book multiples – of 2.90 times for HDFC Bank and 2.99 times for ICICI Bank, respectively.

Rajesh Palviya, head of research, Axis Securities, said selling by foreign institutional investors (FII), which typically have a higher holding in HDFC Bank, is one of the reasons for the stock’s underperformance. Following the abrupt resignation of the last chairman, many investors and traders have cut their exposure to the bank, putting pressure on the stock price.

In contrast, ICICI Bank reported strong overall numbers, which has helped the stock remain stable.

In the private banking space, ICICI Bank and Kotak Mahindra Bank are looking stable among large-cap names, Palviya said. HDFC Bank, meanwhile, continues to face uncertainty over leadership succession and corporate governance, Palviya said.

The divergence between the two stocks is likely to take some time to reverse, he added.

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ICICI Bank currently appears to have an edge over its peer in analyst ratings, with 52 buys and no hold or sell ratings, compared with 48 buys, three holds and no sell ratings at the start of 2026. In contrast, HDFC Bank currently has 47 buy, one hold and no sell ratings, broadly unchanged since the start of the year.