BSE shares tumble 6% on Jefferies’ downgrade to ‘underperform’ rating
Bombay Stock Exchange (BSE) fell by 6% to their day’s low of Rs 4,471 on NSE after the global brokerage firm Jefferies downgraded the stock’s rating to ‘underperform’ from an earlier ‘hold’ rating.
However, despite a downgrade in the rating, the global brokerage firm has hiked the target price to Rs 3,500 from Rs 2,850 previously.
Jefferies stated that the stock’s recent run-up was fueled by hopes of market share gains but the valuations are factoring the large gains for BSE or strong bounce back in market volumes.
The report stated that while the discontinued weekly products make up 40% of market premiums, the impact on the overall market could be lower (25-30%) if there is a spillover of trades into the continuing weekly products.
“The assumption of a large market share gain may be over-optimistic and the market is not capturing near- and medium-term risks,” said Jefferies in its report.
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