On May 23, 2025, investors monitoring their portfolios through various trading applications experienced a moment of panic when the Bombay Stock Exchange (BSE) shares appeared to crash, with some apps indicating a staggering 67% fall. However, this sharp decline wasn't a market crash but a technical adjustment due to the exchange going ex-bonus after declaring a 2:1 bonus share issue.
BSE had previously announced that it would issue two bonus shares for every one share held, with a face value of ₹2 each. May 23, 2025, was the record date to determine shareholders eligible for the bonus shares. Consequently, the share price adjusted downwards to reflect the increased number of shares in circulation. On May 22, BSE shares closed at ₹6,996.50. On May 23, the stock opened at ₹2,358, with a low of ₹2,335, and was trading around ₹2,360.50, leading some platforms to erroneously display a 66-67% fall when comparing the adjusted price to the pre-bonus close.
This adjustment means that only investors who held the stock on or before the record date are entitled to receive the bonus shares. Investors who purchased shares on or after the ex-date won't qualify for the bonus. While the dramatic price drop may have been alarming, it was a purely technical event.
BSE's stock performance has been remarkable, showing a nearly 240% increase from its 52-week low of ₹705 in July 2024, even when adjusted for the bonus issue. This strong performance is underpinned by robust financials. In the most recent quarterly results, BSE reported a 362% year-on-year jump in net profit, reaching ₹494 crore. Additionally, revenue from operations rose 75% to ₹847 crore.
The bonus issue’s record date coincided with another factor affecting BSE's stock: concerns about a possible expiry day shift by the National Stock Exchange (NSE). On May 22, 2025, reports circulated that the Securities and Exchange Board of India (SEBI) might allow the NSE to shift its expiry day for trading contracts to Tuesday, the same day BSE's derivatives expire. If SEBI approves this shift, it could intensify competition for BSE in the derivatives market, potentially impacting trading volumes on the BSE platform, as NSE is a larger player in the market. This news added to the pressure on BSE's stock, contributing to a nearly 6% intraday fall on May 22.
Despite these concerns, BSE's fundamentals remain strong, with analysts largely maintaining a positive outlook. A Bloomberg survey indicated that out of 14 analysts tracking the company, 12 have a 'buy' rating, while two recommend a 'hold'. The average 12-month consensus price target suggests a slight downside, but the overall sentiment remains optimistic.
In conclusion, while the sharp fall in BSE share prices on certain apps on May 23, 2025, appeared alarming, it was primarily a technical correction due to the 2:1 bonus issue. The underlying performance of the company remains strong, although potential challenges from regulatory changes and increased competition warrant monitoring. Investors should look beyond the immediate price adjustments and focus on the company's long-term fundamentals and strategic positioning in the market.
