Shares of Multi Commodity Exchange of India Ltd. snapped a four-day losing streak on Wednesday, rising as much as 3.5% to Rs 2,735 in early trade as investors returned to the stock after a sharp recent correction.
The rebound comes after MCX was among the worst-hit exchange stocks over the past week, with investors reacting to signs of slowing derivatives activity following the implementation of the Reserve Bank of India's new funding framework on July 1. The stock had fallen 10.5% since June, underperforming the broader market and mirroring the decline in BSE shares.
Exchange stocks derive a significant portion of their revenue from trading activity, making changes in derivatives volumes a closely watched indicator for future earnings.
During the first week of July, MCX's premium turnover declined 43% compared with June and was down 39% from the Q1 average. BSE's premium turnover fell 10% from June levels and 20% from the Q1 average, while NSE recorded declines of 24% and 27%, respectively.
ALSO READ: Behind The Decline: Why BSE, MCX Shares Are Losing Steam?
The weakness follows changes introduced under the RBI framework, which barred banks from funding broker proprietary trading desks and mandated 100% collateral against exposures. The measures tightened liquidity in the trading ecosystem, prompting algorithmic and high-frequency traders to reduce leverage. Lower leverage has translated into softer derivatives trading volumes, raising concerns about transaction-linked revenue growth for listed exchanges.
Brokerage Jefferies said in a report released on Tuesday that derivatives accounted for around 70% of operating revenue for Indian exchanges in FY26, underscoring why investors closely track changes in options trading activity. The brokerage also noted that exchange revenues have become increasingly linked to volatility and derivatives volumes rather than the direction of equity markets.
Despite the recent correction, Wall Street analysts remain positive on MCX's long-term outlook. Among the 15 analysts tracked by Bloomberg, 10 recommend buying the stock, four have a 'hold' rating and one has a 'sell' recommendation.
The average 12-month price target tracked by Bloomberg stands at Rs 3,428, implying a potential upside of 60.7% from the previous regular market close.
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