CAS weighs on NSE, BSE Q2 earnings; MCX rides gold, silver volatility
MUMBAI: The closing auction session (CAS) has contributed to a widening earnings divide between India's equity and commodity exchanges, weighing on profits at the former while the latter has continued to grow.
In the July-September quarter, the National Stock Exchange (NSE) and BSE reported sequential declines in profit as trading activity came under pressure. The Multi Commodity Exchange (MCX), by contrast, benefited from heightened activity in gold and silver, extending its earnings growth.
The outlook for the three exchanges, however, could shift. With the Securities and Exchange Board of India (Sebi) rolling back CAS and restoring the earlier settlement mechanism, trading volumes could recover at equity exchanges, lifting profitability. For MCX, the key question is whether volatility in gold and silver prices can sustain the levels that have driven its recent growth.
NSE's net profit fell 17% sequentially to ₹2,578 crore in the second quarter of fiscal year 2027 (Q2FY27), according to its investor presentation. Its revenue from operations declined 11% quarter-on-quarter (QoQ) to ₹4,067 crore. BSE reported a 7.4% sequential decline in net profit to ₹807 crore, while its revenue from operations fell 8.5% to ₹1,432 crore.
MCX, meanwhile, posted a 10.1% sequential increase in net profit to ₹455 crore, while revenue from operations grew 14% QoQ to ₹800 crore.
The decline in trading activity at the equity exchanges is reflected in derivatives turnover. NSE's average daily notional turnover in equity options fell 16% sequentially in Q2FY27, while BSE's average daily notional turnover in equity derivatives declined 25%.
“With the removal of CAS, we have seen trading volume revive in the October-month series, and it is expected to be back to levels before CAS implementation,” said Shrikant Chouhan, head of equity research at Kotak Neo.
The recovery in sentiment is also reflected in the exchanges' share prices. NSE shares have risen 8.8% since 15 October, when Sebi rolled back CAS, while BSE shares have gained 10.8% over the same period.
Sebi revised the CAS framework on 15 October, restoring the 30-minute volume-weighted average price (VWAP) for settling derivatives contracts on expiry days. The changes will take effect on 7 December. The regulator's move followed concerns that the framework, introduced on 3 August, had triggered abrupt price swings and uncertainty over settlement values on expiry days, prompting market participants to flag risks to liquidity and price discovery.
MCX growth test
For MCX, the outlook will depend heavily on whether volatility in gold and silver prices persists.
“MCX has delivered the strongest growth in Q2FY27 but its earnings are highly dependent on gold and silver volatility, making its current valuations relatively expensive,” said Abhinav Tiwari, senior research analyst at Bonanza.
Volatility in gold has already begun to moderate. In Q2FY27, spot gold on MCX traded within a 15% range, between a closing low of ₹1,40,269 per 10g on 1 July and a closing high of ₹1,61,657 per 10g on 24 August. From the start of Q3FY27 until now, the range has narrowed to 9%, based on closing prices.
Gold and silver accounted for 66% of MCX's futures turnover in the first half of the fiscal (H1FY27), according to its investor presentation. The presentation did not include the corresponding figure for options turnover.
For MCX, growth will also depend on electricity derivatives, coal and minerals platforms, institutional participation and continued activity in gold and silver, Tiwari added.
NSE valuation edge
Analysts see NSE as relatively better placed than its peers, citing its market share, cost efficiency and valuation.
NSE is currently trading at a trailing 12-month price-to-earnings (P/E) multiple of 44.3, compared with 50.5 for BSE and 50.5 for MCX.
“Among both exchanges, NSE is currently trading at a discount to BSE and has a higher market share in all segments plus add-on services like clearing agents. NSE has been better in terms of cost optimization with better financial ratios too,” Chouhan added.
NSE commands a 98% market share in the cash market, 100% in equity futures and 68% in equity options.
From a valuation perspective, NSE looks the most attractive among the three, Tiwari said.
“It offers better value, supported by its strong market position, high margins and expected recovery in derivatives volumes,” he added.