Skip to main content

Brokers find few takers for BSE shares

THE downtrend in the stockmarket has claimed an unexpected victim. Asia’s oldest stock exchange, which saw its benchmark index falling over 40% from its peak, is now facing a drop in its own share price. People familiar with the development say some members are ready to sell BSE shares at a discount to the price at which they received it when the exchange was demutualised in 2007.

“I would be happy if I could get Rs 4,800 (per share),” says Arun Sureka, an investor who is holding 877 shares in BSE. He also claims to know two other investors, who are holding a similar quantity of shares and looking for an exit.
Since a trading platform is not available for BSE shares, brokers do not have much option, but to call fellow brokers to enquire about any interested entities.

It is believed that the low business volume in the cash segment of BSE, coupled with the insignificant derivatives turnover has affected valuations. The lack of clarity over the proposed listing of the shares is also playing spoilsport. The immediate trigger for the share sale is attributed to the steep fall in the income of most brokers who are now looking at alternate sources of revenue.
Brokers, however, have been disappointed as the value of the shares has fallen and there are not many interested buyers in the market. The Bombay Stock Exchange completed the demutualisation process in May 2007 when it placed 51% of its equity with 21 investors, including Singapore Exchange and Deutsche Borse.

A BSE release at that time said the fresh issue and placement of shares in the offer for sale were priced at Rs 5,200 per share, pegging the market capitalisation of BSE at around $1 billion. At the time of demutualisation, BSE broker-members were given 10,000 shares of the exchange for every single card held.
The developments come close on the heels of SBI’s decision to sell a part of its holding in the National Stock Exchange (NSE). According to people close to the development, the bank is hoping to rake in at least Rs 315 crore from the stake sale, which implies a valuation of close to $4 billion for NSE.

A market observer, when questioned about the current value of BSE shares, said it was difficult for anyone to extract a price of more than Rs 4,500 per share due to the dismal performance of the exchange in terms of business volume and also due to the fact that the interest in equity market has dwindled. “The growth in business volume of BSE has not been as much as that of NSE and so the valuations have come down,” he said. A fall in benchmark indices in the period between May 2007 and the present can also act as a barometer for the BSE share price, he added.

Another factor that is believed to have impacted the share price is that of size. Brokers who are currently willing to sell their shares are doing so in small lots and so not many fellow brokers are interested. Also, foreign entities cannot be sounded out, as the maximum permissible limit of foreign holding in the exchange has already been reached. Many large-sized brokerages, interestingly, feel that the share would fetch a far higher price if done by renowned entities.

Broker members were given shares in May 2007 when BSE was demutualised Brokers got 10,000 shares at Rs 5,200 per share for each BSE card Proposed listing of BSE would have provided trading platform for its shares With listing nowhere in sight, brokers & other shareholders looking for ways to sell these shares There are not many entities that are ready to offer over Rs 5,000 for these shares BSE losing share to its much newer counterpart NSE believed to have affected its valuations NSE’s valuation is said to be around $4 billion, while BSE’s pegged around $1 billion


Popular Posts

Your Bill Amounts Are Going To Increase From June 1, 2016

Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994. Union Finance Minister, Arun Jaitley, in his budget announcements proposed to impose a cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services. The present rate of service tax will be hiked to 15 per cent from June 1, 2016, from 14.5 per cent. Take a look at what gets expensive:

Phone Bills: Your phone bills are going to go up. So, pay a good 15 per cent now on service tax on phone bills.

Restaurant Bills :If you are dining in a restaurant that already has service tax applicable, you are going to pay more on your eating out. Though 0.5 per cent on a single bill may not mean much, frequent diners may end-up paying a lot during the year.

Travelling: You will have to pay more for air travel, as there is a service tax on tour operators and travel agents.

NSE Level 3 Data

Before we get into details of NSE Level 3 Data, it is important to first understand the basic operations of the stock market.  All publicly traded equities have a bid price and an ask price when they are bought and sold. The bid is the highest price a trader( or an investor) is willing to purchase a stock. The ask is the lowest price in which he is willing to sell a stock.

Depth of the Market(DOM):Looking at a Level 1, Level 2 or Level 3 quotes can give a trader, a basic idea of how a stock is performing at any given time.

Level 1 Market Data provides the basic market data which includes Bid price, Bid size, Ask price and Ask size.

Level 2 Market Data provides more information than Level I data. Mainly, it doesn't just show the highest bid and offer, but also shows bids and offers at other prices. Now level 2 provides market depth data upto 5 best bid and ask prices.

Level 3 Market Data provides market depth data upto 20 best bid and ask prices .  This primarily used by brokers and ma…

Moneycontrol Terminal - Streaming Live Quotes

Moneycontrol has introduced a new feature Moneycontrol Terminal - an enhanced version of real time price updates. Though there were live quotes provided by the website previously, the present form  gives a better update of live quotes of indices and stocks.

This terminal provides live streaming quotes for both NSE and BSE free. It also provides quotes for most of the indices and also the constituents/stocks of the indices in BSE and NSE.  The terminal also provides live news and other market news, which might be useful for traders. The hardware recommended is minimum of 1 GB RAM.

It would be better if stock of any choice could be added ( market watch of a set of stocks ), which would be easier to track one's trading positions. Anyway, this is a better alternative for people who don't have access to any trading software, to view live action of the markets.

You could just try the same here at Moneycontrol Terminal