The market regulator is reportedly considering higher margins and changes to STT to curb excessive speculation.
Capital market stocks, including BSE, Central Depository Services (India), Motilal Oswal Financial Services, and Angel One, closed lower on Tuesday, following reports that the Securities and Exchange Board of India (SEBI) may introduce curbs on weekly options expiries to reduce speculative trading activity.
BSE was the biggest laggard, closing 4.7% lower at ₹2,369. Motilal Oswal stock ended at 908.1, down 2%, while Angel One and CDSL stocks were down 1.13% and 0.3%, respectively.
According to reports, SEBI is looking at ways to reduce the surging volumes in derivatives trading in order to bring back the focus on cash markets.
The reports said that the Ministry of Finance, in a meeting with SEBI, expressed concerns over the increased speculative trading on weekly expiries not contributing meaningfully to the broader economy.
SEBI is said to be evaluating multiple proposals, including shifting weekly options to bi-monthly or monthly expiries, increasing margin requirements for options, and simultaneously lowering them for cash market trades.
Another proposal reportedly under review is to tweak the Securities Transaction Tax (STT). The proposal is to increase the STT on options to discourage excessive speculation, while reducing it for cash trades to promote healthier participation.
On the flipside, market participants fear that such reforms could dent volumes in the options segment, dampen expiry-day activity, and hurt brokerage revenues.
BSE: Technical Spotlight
BSE is exhibiting a bearish short-term trend after breaking below the key ₹2,500 resistance level, noted SEBI-registered analyst Harika Enjamuri.
The stock is trading under both its 9-day exponential moving average (EMA) at ₹2,460.14 and 70-day EMA at ₹2,542.68. The moving averages are currently acting as resistance levels, she said.
BSE is approaching its 100-day moving average at ₹2,305.76, a crucial support zone that aligns with horizontal demand around ₹2,288.30. A breakdown below this zone could open the door for a deeper correction toward ₹2,015, the analyst added.
The relative strength index (RSI) stands at 42.07, reflecting weakening momentum with room for further downside. Meanwhile, flat volumes suggest a lack of strong buying interest during the recent decline.
Enjamuri believes that for any meaningful recovery, BSE needs to reclaim ₹2,500 with robust volumes. Until then, the trend remains neutral to bearish.
For updates and corrections, email newsroom[at]stocktwits[dot]com<