In its latest session, BSE Ltd, the parent company of Asia’s oldest stock exchange, reached its lifetime high of Rs 2,475 per share, growing over 200% in less than 6 months!!

 

2023 started off no differently than 2022 as the stock continued its downtrend which began from its stock split in March 2022. Overall market conditions deteriorated in January 2023 when Hindenburg published its malicious report against the Adani Group, tanking Indian indices as BSE’s share continued falling as a result.

Although February began positively, banking failures in the West spooked investors as they began dumping Indian equities, thereby further tumbling the indices and the share of BSE as a consequence. The trend continued till March 2023 as Nifty touched a low of 16,913.75 while BSE’s share hit an 18-month low of Rs 406.20 per share, down 62% from its previous high in March 2022.

However, April was a turning point for BSE and the Indian indices as global sentiments turned positive and interest in the undervalued Indian equities was high once again. Inflows surged in the markets as equities began soaring. BSE benefitted from the renewed interest as the stock rebounded from its support near Rs 400 and began climbing.

By the end of May 2023, Nifty had scaled to the level of 18,500 as BSE hit its resistance at Rs 573.30 per share. The level proved difficult to breach as buyers and sellers remained indecisive at it. However, midway through June, BSE witnessed record buying as bulls took over the stock and helped it break through the resistance level.

At the same time, market veterans like Chris Wood (Jefferies), Mark Mobius (Mobius Capital Partners), Shankar Sharma (GQuant Investech), and Nilesh Shah (Kotak AMC) confidently claimed that the SENSEX would reach 100,000 in the next 5 years, bolstering international trust in India’s market as a ‘Bull Run’ was evident in the market. Moreover, SENSEX and BANKEX derivatives were getting popular after their relaunch as total F&O revenues surpassed Rs 500 crores on their first weekly expiry!! 

However, when markets corrected after attempting the 20,000 mark on Nifty 50, BSE did not falter as the momentum continued and it hit its resistance at Rs 940.45 by the end of August when Nifty 50 had contracted back to 19,200.

Although further correction was anticipated, the markets rebounded from the level as buying in BSE improved. In less than 2 weeks of September, BSE’s stock breached its previous high and achieved a new lifetime high at Rs 1,438 per share.

However, the stock witnessed consolidation around this level as the Indian markets declined after Nifty 50 made a lifetime high of 20,222.45. But when October began, bulls did not care for the market as buying continued in BSE non-stop!

Even though Nifty briefly declined below 19,000 at the end of October, BSE kept climbing higher as it scaled new lifetime highs consistently. By the end of October 2023, BSE’s share had climbed up to Rs 1,863 per share, up 43.3% in a single month! November saw BSE continue its winning streak as November saw the share gain another 31% and hit a fresh lifetime high of Rs 2,475 per share (as of the date of reporting).

Some major factors that helped BSE’s stock grow during the year were:- 

  • As of August 2023, FIIs had poured in $16 billion in Indian markets!
  • FPI investment value surged 15% in the September quarter to $651 billion!!
  • Forecasts for Indian equities are very positive as Nifty 50 is expected to surpass 30,000 by 2030! Moreover, SENSEX is expected to reach 100,000 by 2028!
  • Interest in Indian markets has grown as the number of retail options traders has grown sharply in 2023!!
  • The number of Demat accounts opened has been rising consistently since 2019 as the same crossed 114 million in 2022-23 from only 36 million in 2018-19!!
  • The younger generation is deviating from the old ‘Safe’ game as the number of individual traders in the age group of 20-30 accounted for 36% of the total against 11% in 2018-19!!!
  • People are realising that saving money is not enough as investment in Mutual Funds and SIP schemes has grown sharply in 2023, thereby resulting in more money in the Indian markets.

 

 

What’s the future outlook??

Fundamentally, business is booming for BSE. Its revenues in the latest quarter surged 40% to Rs 206.60 crores as EBITDA margin more than doubled to 30%! Profits saw the highest growth in BSE history as profits jumped 3x times from Rs 29.4 crores last year to Rs 118.4 crores in Q2FY24!

Other factors like the beta-launch of services by BSE Ebix Insurance, the launch of Commodity Options, BSE E-Agricultural Markets, BASL, EGR, and the commencement of Power Trading by HPX are factors that helped BSE growth throughout 2023.

 

Technically, the RSI of BSE Limited is at 69.47. An interesting observation here is that it has remained over 70 since June 2023 with minor corrections. As soon as it would go below 70, buyers would resume buying and the RSI would shoot up to 80 again!

Currently, after losing over 6% on the reporting date, the stock is trading below its 5-day average but above its 20, 50, 100, and, 200-day averages. 

Considering the stock’s latest declines, it is safe to say that bulls are exhausted after driving the stock up and bears are taking over. At these levels, major profit booking is being seen as the stock fell over 6% in a single day!

However, Indian indices remain vital on the global platform as major FIIs are entering India to invest in the growing market as Indian equities are at the center of attention for global investors.

Therefore, BSE’s share is expected to witness major correction in the coming days but its long-term outlook remains positive.