Bombay Stock Exchange shows strong growth rate
The Bombay Stock Exchange is experiencing strong growth. Its share price has risen 367% in 12 months. This has prompted broker Investec to revise its rating on BSE securities. It has now changed its status from ‘hold’ to ‘buy’.
According to the brokerage, the stock could reach £2,800 per share on the bourse. The analysts also expect the exchange’s market share to continue to grow. Investec believes that the exchange will continue to increase its presence. A key driver will be the expansion of BANKEX’s digital platform capabilities.
Maintaining a target price of £2,800 indicates strong growth potential. The broker expects the index to grow by around 38%.
It is worth noting that the Bombay Stock Exchange focuses on increasing the volume of production instruments on the stock. This strategy has yielded excellent results for the platform. In March 2024, BSE’s share in the options sector increased from 4.2% to 15%.
This was a one-time operation regarding the exchange’s contribution to the Settlement Guarantee Fund. This FX-focused operation took place in December 2023. According to Investec, BSE is unlikely to repeat this in the near future.
Business overview
The Bombay Stock Exchange is the oldest trading platform in Asia. It ranks 8th in the world in terms of market capitalisation. In early 2024, the exchange was worth US$4.5trn.
The BSE was founded in 1875, but trading in Bombay (now Mumbai) began in the 1850s. In those days, brokers would gather at street intersections under the shade of trees and conduct financial transactions. Over time, however, the number of traders grew significantly. As a result, in 1875, the brokers formed a formal organisation with a permanent location.
In 2012, BSE received the United Nations Partner Exchange for Sustainable Financial Development status. The platform launched its main index in 2016. Two years later, it launched commodity derivatives for trading in precious metals.
Financial market development in India
The country’s financial market is actively developing, but the local population is still quite conservative. The following indicators demonstrate this:
– according to current data, only 3% of the Indian population invests in the Bombay Stock Exchange;
– more than 60 million individual investors trade in Indian equities;
– the trading platform has experienced four bear markets in the last 25 years;
– the reason for the bearish sentiment was increased demand from foreign investors.
The mutual fund is one of the most popular financial instruments among the country’s citizens. In 2023, their share of household savings was 6%. Less than 1% of this group’s investments were in shares. In addition, almost 95% of household capital is in bank deposits.
