Domestic exchanges saw mixed earnings in the June quarter. While trading volumes were robust with individual investors showing increased interest in stock trading, negative crude oil pricing had an impact on commodity trading volumes.
The Bombay Stock Exchange (BSE) reported 20 per cent dip in profit before tax (PBT), at Rs 39.8 crore in June quarter. For National Stock Exchange (NSE), the PBT was up by 44.4 per cent, at Rs 922.7 crore.
Slump in initial public offerings (IPOs) amid Covid-19 has been one of the factors weighing on the revenues of BSE. Revenue from operations was down by 8 per cent in June quarter, from the corresponding quarter last year.
“Q1FY20 (June quarter) revenue of around Rs 100 crore was below our estimate, weighed by lower listing fees and transaction charges. Listing fees were impacted due to Covid-19 (lower listings) and BSE suspending over 1000 default companies in 4QFY20 (which were billed and later provisioned for),” analysts at Motilal Oswal Financial Services, said in a client note.
Listing fee collection was down by 10 per cent in the June quarter (at Rs 39 crore) for BSE.
Meanwhile, NSE had a strong quarter with revenues climbing up by 32.2 per cent on Y-O-Y basis, at Rs 1,073.6 crore in the June quarter.
Analysts say NSE’s mutual fund (MF) segment is seeing traction due its competitive pricing vis-a-vis BSE Star MF.
The BSE Star MF platform holds leadership position in MF transaction business with a market share of 80 per cent.
On the commodity front, Multi Commodity Exchange (MCX) has been seeing strong traction in gold trading volumes, but the dip in crude oil volumes following negative price settlements has been a dampener.
The rising interest for gold and silver led to recovery in volumes in July on MCX. Average daily turnover (ADTV) improved to Rs 35,000 crore in July (as of July 28, 2020), which was Rs 23,100 crore in June quarter.
Broking houses say sharp trailing returns and the safe-haven tag, have attracted investors to gold trading on the bourses. In year-to-date, gold prices are up 39 per cent on MCX.
Analysts at Morgan Stanley pointed out that MCX has now enabled its platform to support negative pricing for crude oil contracts and volumes can improve further as margin for crude oil trading normalises from the 100 per cent requirement.
The high margins for crude oil were introduced as a cautionary measure after the unprecedented negative pricing seen for the crude oil contracts in April.
Relaxing of margins for crude oil contracts would require approval from the Securities and Exchange Board of India, which analysts expect to happen in August or September.