The share price of BSE is in focus. The country’s oldest stock exchange is now emerging as a contender for entry into the benchmark Nifty 50 index ahead of the next Index rejig.
Looking at the exchange operator’s share performance, over the last five years, BSE shares have surged an eye-catching 5,000%. This makes it one of the biggest wealth creators in India’s financial sector.
The rally has been powered by explosive growth in derivatives trading, rising retail participation, record quarterly profits and improving operational efficiency.
Now, according to a brokerage report by Axis Capital, BSE may soon enter the elite Nifty 50 club during the September 2026 rebalancing exercise, potentially replacing IT major Wipro.
For investors, this is important because Nifty 50 inclusion often leads to large passive inflows from index funds and exchange-traded funds that track benchmark indices.
“BSE has transitioned from a cash-equity focused exchange to a derivatives driven exchange model with equity derivatives segment contributing 60%+ to overall revenue. The stock has witnessed multiple re-rating driven by sustained market share gain in options premium segment from ~7% in Apr’24 to ~29% May’26TD. Furthermore, other high-margin businesses like BSE Star MF platform and co-location services continue to sustain health momentum. However, we believe the current valuations are stretched and provide limited headroom for upside,” said Sunny Agrawal – Head of Fundamental Research at SBI Securities.
Let’s take a look at the key details every investor should know about this multibagger stock –
BSE: The returns scorecard
BSE’s rally has been eye-catching across almost every timeframe. The stock has consistently outperformed broader market benchmarks over the past few years.
| Time Period | Share Price Performance |
| 1 Month | Up 21% |
| 6 Months | Up 45% |
| 1 Year | Up 70% |
| Year-to-Date (YTD) | Up 60% |
| 5 Years | Up 4,957% |
Why the Nifty 50 reshuffle matters
According to Axis Capital, the next National Stock Exchange (NSE) index rebalancing announcement is expected in the second half of August 2026 and will become effective from September 30, 2026.
The brokerage explained that eligibility is calculated using six-month average data between February 1 and July 31.
The report stated, “Based on the data from 1 Feb to 15 May, we expect 1 constituent change in Nifty 50.”
Axis Capital further added –
“Potential inclusion – BSE (BSE)”
“Potential exclusion – Wipro (Wipro)”
The brokerage also noted that expected passive flows are based on benchmark fund assets under management of nearly USD 45 billion.
If BSE gets included in the Nifty 50, it could attract substantial institutional flows from passive investment products.
What is driving BSE’s explosive earnings growth?
The sharp rise in BSE shares has been closely linked to a strong improvement in the company’s operational performance over the last few quarters.
BSE recently reported its eleventh consecutive quarter of record earnings. Revenue during the March quarter surged 84.7% year-on-year and 25.7% quarter-on-quarter to Rs 1,560 crore.
According to the brokerage report by Nuvama, the biggest growth driver has been the surge in derivatives trading activity.
The brokerage stated, “Transaction charges surged 114.3% YoY/37.6% QoQ largely due to improving ADPTV at Rs 289 billion (up 145.5% YoY/48.6% QoQ).”
Average Daily Premium Turnover (ADPTV) in derivatives trading has become one of the key earnings engines for the exchange.
The report further noted, “BSE’s Apr-26 ADPTV surged 14.6% compared with Q4FY26.”
The derivatives business has seen rapid traction due to rising participation in Sensex weekly options contracts and higher retail trading activity.
For FY26, BSE’s equity derivatives revenue more than doubled to Rs 3,134 crore. Average daily premium turnover also jumped sharply to Rs 19,522 crore compared with Rs 8,977 crore in the previous financial year.
Margin expansion a key trigger for BSE
Apart from revenue growth, BSE has also seen strong operating leverage.
The brokerage report highlighted that several cost components remained under control even as revenue surged sharply.
Nuvama stated, “Tech/employee costs were well contained declining 8.7%/4.1% QoQ.”
The report also added, “This led EBITDA margin to surge to 66.6% (up 937bp YoY/580bp QoQ).”
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margins improved as transaction volumes rose faster than expenses.
However, some costs did rise during the quarter. According to the brokerage, other expenses increased because the Indian Clearing Corporation Limited (ICCL) created provisions against an old receivable.
The brokerage view: Bullish optimism vs valuation caution
Brokerages remain positive on BSE’s long-term business growth, though valuation opinions differ.
Nuvama has maintained a ‘Buy’ rating on the stock and raised its target price to Rs 4,570. According to the brokerage report, this implies an upside potential of around 15% from current levels.
The brokerage stated, “We are tweaking ADPTV estimates, incorporating early STT hike impact, lifting our FY27E/28E APAT by 12.3%/15.9%.”
Nuvama further added, “Post-NSE listing, there shall be further upgrades in earnings.”
The brokerage believes higher trading volumes and continued derivatives momentum could further strengthen earnings visibility.
Meanwhile, Motilal Oswal has maintained a more balanced view.
The brokerage retained a ‘Neutral’ rating with a target price of Rs 4,400 despite increasing earnings estimates.
According to the brokerage report, “We raise our earnings estimates by 17%/20% for FY27E/FY28E.”
The brokerage also noted, “BSE continues to demonstrate broad-based growth across key segments, supported by improving institutional participation, stable retail activity, and structural expansion in STAR MF and index businesses.”
However, Motilal Oswal said it has not factored in the possible impact of future Reserve Bank of India regulations on proprietary trading.
What investors need to watch next
The biggest triggers for BSE may remain linked to derivatives growth, Nifty inclusion and sustainability of earnings momentum.
Investors are also likely to monitor whether trading volumes remain strong after the recent Securities Transaction Tax (STT) changes and whether retail participation continues at current levels.
At the same time, competition in derivatives trading and regulatory developments will remain key factors for the business.
Disclaimer: Investment performance data and brokerage target prices mentioned in this article are for informational and educational purposes only and do not constitute specific buy, sell, or hold recommendations. Financial instruments like equities involve inherent market risks, and past returns are not indicative of future performance. Readers should consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.