What’s New in the Unlisted Space: NSE’s Unlisted Shares Soared Up to 80% in Six Months

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The IPO rush is charging on in full steam on Dalal Street. Now, investors are keenly waiting for the issuing of National Stock Exchange (NSE), India’s largest stock exchange.  Incorporated in 1992, NSE was converted into the status of stock exchange by Sebi in 1994 and started operations in the same year. NSE owns several subsidiaries including NSE Clearing, NSE Investments, NSEIT, NSEIT (US), NSDL, NSE Indices, NSE Data & Analytics and more.

In April 2021, the NSE saw its valuations shoot up 80% in six months. A major reason for this jump surge is because investors are beginning to factor in strong growth amid retail trading volumes and returns from the IPOs from last year. Thanks to the excellent numbers that the stock exchange has reported in the previous few quarters, NSE shares in the unlisted market have rallied sharply.

NSE shares are currently traded at Rs 1700-1800 apiece. The bourse saw a 47% growth in consolidated revenue while its net profits reached 116% during the nine months ended December 2020. This is especially interesting when you consider that the NSE has nearly a monopoly in equity trades. They have about a 92% market share in the cash market, and a near 100% in the derivatives sector. Currently buying NSE shares is not easy – there are strict compliance measures including Know Your Customer, funding sources, and background check of investors. Just the paper work might cost Rs 10,000-15,000. If the norms are relaxed, the stock can see an immediate rise. What’s more, the exchange takes some time to approve the investors. Despite this and the fact that the NSE’s proposed listing of shares is going to happen next year, they are in high demand.

In 2020, for example, State Bank of India sold 1% stake in the NSE. SBI at the moment holds a 3.23% stake in the bourse. Similarly, SBI Capital Market and Stock Holding Corporation each hold 4.33% and 4.44% stakes in these shares respectively. The biggest investor, though, is Life Insurace Corporation, which has a whopping 12.51% share in NSE. Interestingly, it was in 2020 that NSE’s capital market segment’s average daily turnover grew by 57%. Plus, transaction volumes through mobile and internet-based platforms surged, accounting for 35 per cent of total cash market turnover.