NSE Set for Modest Debut Gains as Derivatives Slowdown Weighs

The National Stock Exchange of India is poised for a modest gain of 2% to 3% when its shares begin trading on Thursday, as investors balance the bourse's commanding market position against a slowdown in derivatives activity, according to analysts and unlisted-share market data.

The 225.6 billion rupee ($2.3 billion) offering is India's second-largest on record, trailing only the 2024 listing of Hyundai Motor's India arm. The debut is being watched as a gauge of investor confidence in the country's largest exchange operator, whose dominance has long driven strong growth.

NSE handles roughly 93% of India's cash-equity turnover and 75% of options activity. However, derivatives trading has cooled amid tighter regulation, higher taxes and concerns over the new closing auction, raising questions about the exchange's reliance on that segment for earnings growth.

In the grey market, where IPO shares change hands before listing, indications point to a modest premium, analysts said.

"While the grey market is hinting at a positive listing, we expect the stock to drift down through the day given concerns around moderating earnings growth due to slowing derivatives activity," said Dharmesh Kant, head of equity research at Cholamandalam Securities.

Investors will also monitor the expiry of anchor investor lock-ins and trading patterns as more shares become available after the debut. About half of the $703 million in shares allotted to anchor investors, including the sovereign wealth funds of Norway and Abu Dhabi, will be eligible for trading on October 21, with the remainder available from December 20.

The IPO was subscribed 5.71 times, attracting bids worth more than $10 billion. Institutional investors drove demand, while retail investors bid for only slightly more shares than were available to them.

Following its debut, NSE will rank among the world's 10 largest listed exchanges and among India's biggest listed companies by market value.