MCX vs BSE: Bernstein rates one stock ‘Outperform’; sees 80% performance divergence ahead 

Bernstein’s framework is built around three factors: near-term volume trends, earnings revisions and valuations. It said retail derivatives had driven strong earnings and valuation expansion in recent years, but the next leg of the exchange story will depend on whether trading activity continues to support those expectations. 

MCX: Commodity trading enters an inflection phase

Bernstein sees MCX as the stronger story because commodity participation is still at an earlier stage compared with equities. The brokerage expects the exchange to benefit from rising retail participation, new products and the ability to bring equity derivatives traders into commodities.

“We see exceptional growth momentum in contracts traded, and this can go on,” Bernstein said. It added that equity derivatives offer MCX a “long runway for cross-pollination”, with the exchange currently accounting for about 25% by trader count and around 10% by volumes in the relevant comparison. 

The brokerage also sees near-term earnings momentum ahead of expectations. It said MCX was about 10% ahead of the Street on Q2FY27 volumes and FY27 earnings, while continued growth momentum and earnings upgrades could keep its valuation elevated. Bernstein values MCX at around 45 times FY28 earnings. 

The opportunity is not limited to existing commodity contracts. Bernstein expects the expansion of the product basket to support participation, while higher commodity prices, particularly in bullion, can also increase trading activity. The brokerage’s central argument is that MCX still has room to broaden its participant base before the commodity market reaches the maturity currently seen in equity derivatives.

BSE: Strong gains give way to normalisation

BSE’s setup is almost the opposite. Bernstein said the exchange benefited from strong market volumes and market-share gains during FY23-FY26, resulting in a 120% compound annual growth rate in earnings per share over that period. But the brokerage believes the conditions that drove that exceptional growth are beginning to moderate. 

“The best is behind,” Bernstein said in its BSE assessment. The brokerage expects FY28-FY29 growth to normalise to the mid-teens as market volumes moderate and BSE’s market-share gains peak. 

Bernstein said BSE was already around 9% behind the Street on Q2FY27 volumes and about 2-4% behind on FY27-FY29 earnings growth. In its view, a combination of slower market volumes and moderating earnings growth could put pressure on the exchange’s valuation. It values BSE at around 32 times FY28 earnings. 

Volume trends decide the MCX-BSE divide

Bernstein’s core framework is straightforward: “Follow ‘near-term volume trends,’ and how they shape revisions and valuations.” The brokerage believes beats or misses on near-term volume growth can influence earnings revisions, while the direction of those revisions ultimately determines whether current valuations can be sustained. 

That creates a significant difference between MCX and BSE. MCX is entering a period in which Bernstein expects contracts traded to continue gaining momentum, while BSE is coming off a period of exceptionally strong growth and is now facing moderation in volumes and market-share gains.

Retail participation remains the bigger opportunity for MCX

Bernstein believes the retail participation story has further to run, particularly in commodities. Its argument is that the equity derivatives boom has created a large pool of traders who could gradually participate in commodity derivatives as product awareness and penetration increase.

The brokerage said the “growth divergence and revision cycles drive our preference – MCX over BSE.” In other words, the relative call is not simply based on which exchange has the stronger franchise today. Bernstein is placing greater weight on where volumes and earnings estimates are heading from here. 

MCX also benefits from a broader product opportunity. Bernstein sees commodities at an earlier point in the participation curve, leaving room for new contracts and greater retail penetration to add to trading activity. That provides a longer runway than the more mature equity derivatives market.

Regulatory risks remain important for both exchanges

Regulation is the key risk in Bernstein’s framework. The brokerage’s base case is “a ‘status-quo’, based on recent regulatory comments and the assumption that losses will be borne by power traders. 

Bernstein said potential regulatory changes could affect both forecasts and valuations. At the same time, it noted that the regulator has been vocal about equity derivatives but has eased commodity regulations, including the consultation paper relating to participation in commodities. The brokerage said that paper was a positive factor for MCX, although it was not included in its forecasts. 

MCX gets the edge, BSE faces a tougher setup

Bernstein’s initiation leaves a clear divide between the two exchanges. MCX gets an ‘Outperform’ rating because the brokerage sees strong contract growth, scope for cross-pollination from equity derivatives and a longer runway for commodity participation. BSE receives an ‘Underperform’ rating because Bernstein expects the exceptional growth of the past few years to normalise as volumes moderate and market-share gains peak. 

The key distinction is therefore the stage of the growth cycle. Bernstein sees “inflection” in commodities and “normalisation” in equities, making MCX its preferred exchange between the two. 

Disclaimer: This article is based solely on Bernstein’s India Exchanges: Inflection vs. normalization – Following the volumes; MCX (Outperform) & BSE (Underperform) report dated September 8, 2026. The information is provided for informational and educational purposes only and should not be considered investment advice or a recommendation to buy, sell or hold any security. Brokerage estimates, earnings forecasts, valuation assumptions and ratings are subject to change and may differ from actual business or market outcomes. Stock market investments are subject to market risks, including the possible loss of principal. Readers should independently assess the information, consider their own financial circumstances, investment objectives and risk tolerance, and consult a qualified financial adviser before making any investment decision. Neither the author nor the publication assumes responsibility for any financial loss arising from reliance on the information presented in this article.