NSDL, CAMS, KFin Tech shares gain; what's fuelling the rise in capital market-themed stocks?

Shares of depositories, clearing houses and other capital market intermediaries witnessed gains in Thursday's trade, tracking an uptick across the broader capital markets ecosystem. Select stockbroking and allied stocks were also seen trading higher.

Computer Age Management Services Ltd (CAMS), National Securities Depository Ltd (NSDL) and KFin Technologies Ltd climbed up to 3.63 per cent at the last check.

Other stocks in the capital markets space, including Motilal Oswal Financial Services Ltd (MOFSL), Monarch Networth Capital Ltd, 360 One Wam Ltd, Nuvama Wealth Management Ltd, DAM Capital Advisors Ltd, Angel One Ltd, Dolat Algotech Ltd, Emkay Global Financial Services Ltd, Geojit Financial Services Ltd, Arihant Capital Markets Ltd and Aditya Birla Money Ltd, surged up to 5.19 per cent.

"Capital market-themed stocks are benefiting from improving market sentiment, supported by strong FII buying, declining crude oil prices and healthy quarterly results. The market recovery is improving investor confidence and trading activity, which could support earnings growth for exchanges, brokers, depositories and asset management companies," said Ravi Singh, Chief Research Officer at Master Capital Services.

The sector outlook remains positive, Singh added, while advising investors to focus on fundamentally strong companies with reasonable valuations.

Meanwhile, shares of National Stock Exchange of India Ltd (NSE) were also trading 2.24 per cent higher on Thursday.

Commenting on India's largest exchange's stock performance, market veteran Arun Kejriwal said the stock has rallied in line with the broader upmove in large-cap stocks. "Clearly, if Indian markets have to stay bullish, the listed exchanges space cannot remain subdued or underperform," he added.

Select brokerages have also recently initiated coverage on NSE. Nuvama Institutional Equities began coverage on the exchange with a 'Buy' rating, citing its dominant market position and valuation discount to BSE Ltd.

Nuvama values NSE at 40 times its September 2028 estimated earnings per share (EPS), arriving at a 12-month target price of Rs 2,220.

MOFSL has also initiated coverage on NSE with a 'Buy' rating and a one-year target price of Rs 2,300.