SEBI has unveiled draft guidelines aimed at controlling the volatility in the Indian futures and options (F&O) market. The proposed measures include rationalizing options strikes, requiring upfront collection of option premiums from buyers, and eliminating calendar spreads benefits on expiry day. Additionally, SEBI plans to introduce intraday monitoring of position limits, increase contract sizes by approximately four times, streamline weekly index products, and raise margins for contracts nearing expiry. These steps are intended to enhance market stability and mitigate excessive speculative trading.
Post the guidelines, Investec has issued a fresh note on Angel One. Investec projects a 30% reduction in the number of derivatives orders per client, with Angel One likely increasing its fees from ₹20 to ₹25 per order. The new guidelines, which include restricting weekly options to one expiry per exchange and increasing lot sizes, are expected to notably affect trading volumes. With zero-day expiry options decreasing from 20 to around 11 per month, trading volumes may shift to the day before expiry.
In terms of financial impact, Investec’s base case scenario forecasts an EPS of ₹140 for FY26, applying an 18x multiple for a target price of ₹2,500 per share. In a bearish scenario, where orders per client might drop by 50% and pricing increases by 25%, the EPS could fall to ₹105, leading to a target price of ₹1,700. The stock’s mean valuation since listing has been 14.8x. Notably, these projections do not account for potential cost rationalizations that could mitigate some of the impacts.
