NSE set for trading debut as India’s biggest stock exchange, modest gains seen

The National Stock Exchange of India (NSE) is poised for a modest 2%-3% gain in its trading debut on Thursday, according to analysts and market data. The ₹22,560 crore ($2.3 billion) offering, India's second-largest IPO ever, serves as a crucial test of investor confidence in the country's premier exchange operator. NSE's dominant market position has traditionally fueled its growth, accounting for around 93% of India's cash-equity turnover and 75% of options activity.

However, analysts note that derivatives activity, which makes up a significant portion of NSE's earnings, has been slowing due to tighter regulations, higher taxes, and concerns over a new closing auction mechanism that could impact investor sentiment. The grey market, where IPO shares are traded before official listing, suggests a modest premium for the company's shares.

Despite this optimism, Dharmesh Kant, head of equity research at Cholamandalam Securities, anticipates the stock to dip throughout the day due to apprehensions about moderating earnings growth stemming from the slowdown in derivatives. Investors will closely monitor the expiry of anchor investor lock-ins and the subsequent trading of the remaining shares, with half of the allotted shares, totaling $703 million, becoming tradable on October 21 and the rest available from December 20.

The IPO was oversubscribed by 5.71 times, garnering bids worth more than $10 billion, with institutional investors leading demand and retail investors placing slightly fewer orders. Upon completion, NSE will join the ranks of the world's 10 largest listed exchanges and become India's biggest listed company by market value.