BSE, MOFSL, Groww parent Billionbrains Garage Ventures, Angel One, Nuvama Wealth and KFin Technologies gain up to 3% as investors anticipate a possible rollback of the Closing Auction Session framework for derivatives

Shares of companies linked to India’s capital markets were in strong demand on Tuesday, with stocks across exchanges, brokerages, wealth-management firms and financial-market platforms advancing sharply. The buying interest followed reports that the Securities and Exchange Board of India (SEBI) may reconsider the recently introduced Closing Auction Session (CAS) mechanism for determining derivatives settlement prices.

BSE, Motilal Oswal Financial Services (MOFSL), Billionbrains Garage Ventures, the parent company of Groww, Angel One, Nuvama Wealth Management and KFin Technologies were among the stocks that gained around 2-3 per cent during intraday trading.

The broader capital-market theme also outperformed the benchmark indices. The Nifty Capital Markets index was up around 1.4 per cent in early trade, while the BSE Capital Markets & Insurance index gained about 0.7 per cent. At the same time, the Nifty 50 and Sensex were trading with gains of around 0.2 per cent.

SEBI’s Possible Review of Derivatives Settlement Rules

The immediate trigger for the rally was a report that SEBI could exclude derivatives from the Closing Auction Session for at least one year.

The regulator introduced the CAS framework in August 2026 as part of changes to the way settlement prices are determined. However, the move has been followed by concerns among market participants over its impact on derivatives activity, particularly around expiry sessions.

Under the proposed revision, derivatives could once again use a 30-minute volume-weighted average price (VWAP) mechanism for settlement. The CAS framework could potentially remain applicable to less-liquid stocks in the cash market.

A revised framework is expected to be announced by the end of October, according to the reports.

For exchanges and intermediaries, any reduction in uncertainty surrounding the derivatives settlement mechanism could be positive because trading volumes and market participation are closely linked to transaction-based revenues.

BSE Shares Gain More Than 2%

BSE was among the prominent gainers in the capital-market segment. The stock rose more than 2 per cent in early trading, extending investor interest in the exchange operator.

BSE has benefited significantly from the expansion of India's equity derivatives and broader capital-market participation in recent years. However, changes in derivatives trading patterns and regulatory measures have made the outlook for exchange volumes more closely watched by investors.

Any recovery in derivatives activity could potentially improve transaction volumes and support the revenue outlook for exchanges and other market infrastructure companies.

Brokers and Wealth Managers Also Attract Buying

Brokerage companies were also in focus as investors assessed the possibility of a gradual recovery in derivatives activity.

Angel One gained around 2-3 per cent, while MOFSL and Nuvama Wealth Management also advanced. These companies have exposure to multiple segments of the financial ecosystem, including broking, wealth management, investment banking, asset management and other capital-market services.

The regulatory developments are therefore being viewed not only through the lens of exchange volumes but also in terms of their potential impact on brokerage activity and investor participation.

Groww parent Billionbrains Garage Ventures was another notable gainer. The company is closely linked to India's rapidly expanding retail-investor ecosystem, where rising demat accounts, mutual-fund participation and online trading have created strong structural growth opportunities.

F&O Activity Under Pressure After CAS

The introduction of CAS coincided with a noticeable reset in futures and options activity. According to Motilal Oswal Financial Services' second-quarter FY27 preview, the July-September quarter saw weaker cash-market volumes as the new settlement framework and subdued market sentiment affected trading activity.

The Nifty declined around 5 per cent during the quarter, while uncertainty across global markets also contributed to cautious investor behaviour.

The derivatives segment, particularly options trading, has been a major source of activity for Indian brokers and exchanges. Any prolonged decline in trading volumes can therefore affect transaction revenues and profitability across the capital-market ecosystem.

September Shows Signs of Recovery

Despite the disruption following the implementation of CAS, derivatives activity showed signs of improvement during September.

According to MOFSL, options premium average daily turnover increased around 22 per cent in September compared with August. However, activity remained significantly below the levels recorded during the first quarter of FY27.

This suggests that market participants may be gradually adjusting to the new framework rather than completely withdrawing from derivatives trading.

A sustained recovery in activity during the second half of FY27 could therefore become an important earnings catalyst for exchanges, brokers and other market intermediaries.

Commodity Trading Provides an Additional Tailwind

While equity derivatives faced pressure, commodity markets emerged as an important source of strength for several financial-market businesses.

MOFSL highlighted record-high commodity trading volumes during the quarter, helped by heightened macroeconomic volatility. Movements in crude oil, gold, silver and other commodities have increased trading opportunities for market participants.

The strong performance of commodity volumes, particularly on the Multi Commodity Exchange, has helped offset some of the weakness in traditional broking activity.

For diversified financial-services companies, the ability to generate revenue from commodities, wealth management, margin funding and other non-broking businesses is becoming increasingly important.

MTF and Non-Broking Revenue Could Support Brokers

Another important factor for the brokerage industry is the expansion of margin trading facilities (MTF).

MOFSL expects the growing MTF book and other non-broking revenue streams to partly offset the pressure on conventional broking income. This diversification could help brokers maintain earnings momentum even if derivatives volumes take longer to recover.

The rise in MTF activity also reflects continued investor participation despite periods of market volatility, although higher leverage can increase risks for investors during sharp market corrections.

Demat Openings Remain a Structural Positive

The expansion of India's retail-investor base remains a major long-term positive for capital-market companies.

MOFSL noted a recovery in demat account openings during the September quarter. Increasing participation through online investment platforms, mutual funds, systematic investment plans and direct equity trading continues to expand the addressable market for brokers, exchanges and wealth-management companies.

India's capital-market ecosystem has therefore continued to develop despite short-term regulatory and volume-related challenges.

Market Outlook

The rally in capital-market stocks reflects expectations that a possible adjustment to derivatives settlement rules could remove some of the uncertainty surrounding F&O activity. BSE, brokers, wealth managers and digital investment platforms could benefit if derivatives volumes gradually recover in the second half of FY27.

However, the near-term outlook will remain dependent on the final framework announced by SEBI, market volatility, retail participation and overall trading volumes. Investors will also monitor whether the September recovery in options activity continues in October and whether cash-market volumes improve.

For the broader market, stronger participation from financial and capital-market stocks could provide support to sentiment. At the same time, investors should watch regulatory developments closely because changes in settlement mechanisms can have a direct impact on trading behaviour, volumes and the earnings profile of market intermediaries.