NSE debuts with a modest 5% gain after $2.4 billion IPO

The National Stock Exchange (NSE) of India made a modest debut on Thursday, with its shares climbing 5.2% to Rs1,878 at the opening of trading on the BSE. The initial public offering (IPO) priced at Rs1,785, marking the second-largest share sale in the country's history, following Hyundai Motor India's $2.9 billion offering in 2024.

At the offer price, NSE carries a valuation of $46 billion, positioning it as the world's eighth-largest listed exchange by market value. The London Stock Exchange Group, by comparison, is valued at around $52.5 billion. The NSE's offering was subscribed five and a half times, with institutions leading the demand, including LIC, Norges Bank Investment Management, ICICI Prudential Asset Management, Quant Mutual Fund, and Mirae Asset Mutual Fund.

Among the anchor investors were Goldman Sachs Asset Management, HSBC, Fidelity, GIC, Abu Dhabi Investment Authority, and Eastspring. While retail investors approached the IPO cautiously, citing concerns over derivatives volumes, tighter regulation, and anticipated increased share supply, valuation worries had previously prompted NSE to reduce both the offering size and price.

The high proportion of options trading fees — more than 60% of NSE's operating revenue for fiscal 2026 — underscores the impact of regulatory tightening on speculative derivatives trading. Analyst Sharnie Wong from Bloomberg Intelligence noted that earnings growth had slowed in fiscal 2026 and may stay under pressure due to regulatory scrutiny and higher taxes on equity futures and options.

However, brokerage and market veterans remain optimistic about NSE's long-term prospects. Macquarie initiated coverage with an outperform rating, praising the exchange for its market dominance and technological prowess. Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services, anticipates a potential annual growth rate of 15%-20% over the next decade, driven by new products, extended trading hours, and expansion into commodities and data.

However, he acknowledges that regulatory headwinds might dampen near-term growth. The NSE's journey to public listing after several attempts between 2016 and 2024 was fraught with regulatory and governance challenges.