NSE To File IPO Draft This Week; Listing to Catapult Bourse Into Nifty's Top 10

The National Stock Exchange of India (NSE) is likely to file the draft prospectus (DRHP) for its initial public offering (IPO) -- one of the most anticipated events in Indian capital markets – early this week said sources. As a systemically vital institution, the bourse's public listing comes with regulatory nuances, and a diverse web of institutional and individual sellers, apart from massive scale.

The unlisted shares of NSE are now trading above Rs 2,000 in most leading platforms, with price/earnings multiples near 50. At above Rs 5 lakh crore market capitalization, listing will position NSE at the upper echelons of Nifty -- its widely-tracked 30-year-old, 50-stock basket. NSE would likely join the league of top 10 most-valued Indian firms. While NSE's unlisted shares are widely held by India's family offices and ultra-rich, institutional holding is concentrated.

ALSO READ: NSE IPO In Focus After SEBI Expert Panel Clears Key Rs 1,800 Crore Settlement Plan: Reports

Life Insurance Corporation of India (LIC) owns more than 10% in NSE. Stock Holding Corporation of India (SHCIL) holds 4.4%. State Bank of India (SBI) (Direct holding) is above 3%, while SBI Capital Markets, it subsidiary, holding is above 4%. Together, these three institutional groups own 22.6%. SEBI has strict shareholding regulations for market infrastructure institutions (MIIs). Trading members, their associates, and agents collectively hold near 35% stake in NSE.

The massive IPO unfolds against a historic capital flight from Indian equities. The Nifty experienced significant downward pressure since hitting its lifetime peak, from relentless, record-breaking Foreign Portfolio Investor (FPI) selloff. It was primarily driven by geopolitical escalations and a sharply depreciating the INR hovering near the 95-per-USD mark.

Global capital rotation toward cheaper, AI-centric hardware markets like Taiwan and South Korea, foreign funds have also triggered the outflow. This exit has been heavily concentrated in the Banking, Financial Services, and Insurance (BFSI) sector, which on NSE commands largest weightage. The robust cushion of Domestic Institutional Investor (DII) flows and monthly retail SIPs has prevented an outright market crash.

This pillar is now being questioned by some analysts. A recent Bernstein report on Indian mutual funds highlighted that while Systematic Investment Plan (SIP) inflows are a looming "game of patience". The brokerage warned that prolonged market underperformance could jeopardize continued inflows. When current MD and CEO Ashish Chauhan joined NSE in 1991–92, the bourse had only around a million investors. India had 19,300-odd PIN codes — and the market barely touched a fraction.

That participation now spans 99.85% of the country's PIN codes, he said. The Depositories Act of 1996 realigned India's financial landscape, eliminating physical share certificates By March 2020, India's demat accounts were 41 million. In August 2022, this crossed 100 million and then the 200 million milestone.

Rising equity participation, since April 2020, has contributed to an estimated Rs 57 lakh crore increase in household equity wealth. “After bringing trust in the markets system, the technology upgrades adopted by NSE placed it on par with leading global exchanges. All the major high-frequency firms operating globally, are now among traders on NSE,” said Manjiri Muzumdar, Head - Sales Trading at domestic brokerage Emkay Global Financial Services.

ALSO READ: NSE IPO: Government Nudges LIC, SBI, Other PSUs For Stake Sale Under OFS

Global Comparison of Exchange Listings and Market Cycles

The demutualization wave of the late 1990s and early 2000s produced several prominent bourse listings. HKEx demutualised and listed on June 27, 2000; Deutsche Börse went public in 2001; and the ASX joined the wave. Nasdaq listed in 2002; NYSE Euronext was formed through a 2006–2007 merger; ICE acquired the NYSE in 2013, and Euronext regained independence through its own IPO in 2014. 

Interestingly, in most cases, exchanges' listings marked turning points in their index returns. HKEx listed in mid-2000 as the Hang Seng was entering a two-year bear market after the dotcom bust; Nasdaq listed in 2002 at the very floor of the post-bubble crash. Nasdaq Composite returned 216% over the decade ending in 2025. The FTSE 100, against the backdrop of the LSE's demutualization in 2001, has delivered more modest returns.

Deutsche Börse's 2001 Frankfurt listing similarly preceded the DAX's extended recovery from its 44% loss in 2002, before entering a multi-decade bull market. An investment in the S&P 500 in 2006, the year of the NYSE Euronext merger, would have returned 649% nominally by 2026. The ASX, the earliest to list among large exchanges, saw the All Ordinaries move from roughly 2,700 at its 1998 demutualization to a peak above 6,700 before the credit crisis — a near-150% run in under a decade. 

Against this backdrop, in 25 years, the Nifty 50 has delivered CAGR returns within 8.7–13.2% band. Chauhan, marking the index's 30th year, cited an annualised return of 12.7% in rupee terms over three decades. It is above the S&P 500's roughly 10–12%, and well ahead of the FTSE 100.

ALSO READ: Vedanta Aluminium, Power, Oil & Gas, Iron & Steel Shares Debut On BSE, NSE: Five Things To Know

In every comparable case — HKEx, Deutsche Börse, Nasdaq, NYSE Euronext — the decade following the exchange's public float was materially better for the benchmark than the decade before. Exchange listings forced transparency, governance upgrades, and capital deepening that reinforced investor confidence in the underlying market. NSE's listing ends a nearly decade-long delay triggered by the co-location probe.

The governance cleanup has already occurred before the float — a structural positive that peers didn't always have at listing. If the global precedent holds and Nifty tracks its own long-run mean of 11–13% CAGR in the post-NSE-IPO decade, the index between 38,000 and 42,000 by 2035. It is a base case projection from the history of listed exchanges.

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.