Wall Street's Fear Index is doing something strange. Here's what it means for stocks

Wall Street brokers are expressing bullish sentiments towards the National Stock Exchange of India Ltd. (NSE), anticipating its dominance to grow in India's expanding capital markets. Investment firms such as Morgan Stanley, JPMorgan Chase & Co., and 360 ONE Capital Markets Pvt. have initiated coverage of NSE with an overweight rating.

Morgan Stanley, the most optimistic, has set a price target of ₹2,315 for the shares, suggesting a potential 30% increase from the current closing price. JPMorgan Chase & Co. predicts the shares to reach ₹2,130, while 360 ONE Capital Markets Pvt. has recommended a target of ₹2,100. These firms, as well as affiliates of Morgan Stanley, were involved in NSE's initial public offering.

Morgan Stanley's analysts highlight the exchange as a "strong play on financialization of household savings" and a shift towards equities. They note that India's capital markets remain underpenetrated, with limited participation in the cash market and derivatives trading. The brokerage firm believes that NSE's dominant market share and asset-light business model will maintain premium valuations.

New ventures like commodities trading, a mutual-fund ordering platform, and electronic gold receipts could help reduce NSE's reliance on equity options and boost revenue and profits by up to 15% by fiscal 2030, according to Jefferies. Analyst Swarnabha Mukherjee from 360 ONE Capital Markets Pvt. suggests that a recovery in capital market conditions, along with the potential upside from smaller revenue streams, could further benefit earnings.