Despite sharp volatility in markets since the Iran war broke out in February and oil prices surged above $110 per barrel, investors have turned increasingly nervous. Yet, for exchanges, heightened uncertainty has translated into a surge in trading activity, speculation and volatility, all of which have worked in their favour.
That has made listed exchange operators BSE and MCX among the market’s standout performers this year, with their shares rallying 61% and 56%, respectively, on a year-to-date basis.
The rally reflects rising investor confidence in exchange-led businesses, which benefit directly from higher trading volumes, growing participation and improving profitability and Q4 is a case in point.
BSE earned Rs 1,311 crore from transaction charges in Q4FY26, marking a 114% jump from Rs 953 crore in the year-ago period and a 38% increase from Rs 612 crore in Q3FY26. Consolidated net profit for the quarter rose 61% year-on-year to Rs 797 crore from Rs 494 crore. Revenue during the quarter surged 85% to Rs 1,564 crore compared with Rs 847 crore a year earlier.
Meanwhile, MCX reported a consolidated net profit of Rs 530 crore in Q4FY26, sharply higher than Rs 135 crore in the corresponding quarter last year, reflecting a 291% rise. Revenue from operations jumped 205% year-on-year to Rs 889 crore from Rs 291 crore. The strong performance was supported by a sharp acceleration in FY26 average daily turnover (ADT), driven largely by bullion and energy futures volumes, which doubled compared with FY25. Bullion options premium turnover rose 1.08x, while notional turnover increased 1.4x, led by bullion and energy contracts.
So, which exchange are brokerages betting on?
On BSE, Jefferies remains cautious despite acknowledging strong growth. The brokerage pointed out that BSE’s cash market share remained stagnant at 7% in Q4FY26, similar to FY25 levels, largely due to limited adoption of the common contract note system. It also flagged weak recurring revenue growth, with listing services revenue declining 5% year-on-year because of a 34% fall in processing and other listing fees.
Jefferies noted that BSE’s strong Q4 operating revenue growth of 85% year-on-year was largely driven by options average daily turnover (ADTO), which rose 145% year-on-year amid volatility linked to the Middle East conflict.
However, the brokerage believes the next phase of growth will need to come from non-expiry trading days, especially as expiry-day turnover for Sensex and Nifty contracts has now become similar. Jefferies expects BSE’s FY27 estimated ADTO to grow 45% year-on-year to Rs 28,200 crore, driven by greater foreign portfolio investor participation and increased monthly contracts.
The brokerage added that even if SENSEX derivatives eventually become larger than NIFTY weekly contracts by FY29, the implied upside from current levels appears limited. It maintains a Hold rating on the stock with a target of Rs 3,620. It has cut FY27 and FY28 EPS estimates by 4-5% due to lower volatility expectations.
ICICI Securities, with a Hold call and a target of Rs 4,010, echoes the view. The brokerage said its estimates now factor in gradual systemic volume growth after higher securities transaction tax implementation and lower-than-expected market share gains. Regulatory changes remain a key downside risk, though stronger-than-expected volume growth could provide upside.
On MCX, brokerages appear more constructive.
HDFC Securities highlighted that MCX delivered another strong quarter, largely driven by a nearly 50% jump in options premium volumes and a 7% increase in futures ADTV.
The brokerage said crude oil remained the biggest growth driver during the quarter, with premium ADTV surging 98% sequentially amid heightened geopolitical volatility. Although bullion volumes corrected nearly 50% from January 2026 highs by April, the weakness was offset by strong traction in crude trading.
HDFC Securities also pointed to structural growth drivers, including a 64% rise in traded options unique client codes (UCCs), supported by increasing participation through digital brokerage platforms and improved retail trading experience.
The brokerage expects momentum to sustain in FY27, aided by continued commodity volatility, product launches, institutional participation in non-cash settled contracts and rising adoption among SMEs and corporates. It maintained a “Buy” rating on MCX with a target price of Rs 3,750.
ICICI Securities said persistent volatility in bullion and energy commodities has continued to support MCX’s trading activity, revenue growth and profitability. The brokerage noted that while April and May volumes moderated after a strong Q4, gold and silver prices are once again showing signs of a rebound.
The brokerage expects MCX’s EBITDA margins to remain strong at 72.8% and 72.3% in FY27 and FY28, respectively, supported by operating leverage and controlled expenses. It values MCX at 42x FY28 estimated PAT and has a target price of Rs 3,380.
Wall Street major Morgan Stanley maintained its “Overweight” rating on MCX and raised its target price to Rs 3,665 from Rs 3,270. The brokerage raised FY27 and FY28 ADTR and EPS estimates, citing sustained commodity activity amid geopolitical uncertainty.
During the earnings call, MCX management expressed confidence in a strong FY27, although it acknowledged quarterly cyclicality. The company also said it intends to deploy accumulated capital towards organic and inorganic growth opportunities, new product segments and ancillary businesses rather than increasing shareholder payouts.
With volatility across equities, commodities and global markets remaining elevated amid the Iran conflict, both BSE and MCX are emerging as direct beneficiaries of the surge in trading activity. For investors, the choice between the two may ultimately come down to one question: whether the next leg of market action will be driven more by equities or commodities.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
