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What is the story about?
Demand for the National Stock Exchange’s (NSE) anchor book has been “unexpectedly large” ahead of its much-awaited IPO, despite the anchor book size being cut to around ₹6,250 crore from ₹9,000 crore, managing director and CEO Ashish Chauhan said at a press conference in Delhi.
The smaller size, however, has not dented investor interest, with both foreign investors and domestic institutions showing strong demand.
“There is a large number of investors seeking a large number of shares,” Chauhan said, adding that the exchange had limited shares to distribute despite the strong interest. The final anchor book allocation is expected to be known tomorrow.
He said the allocation would follow a fixed framework, with separate buckets for local mutual funds, non-mutual fund investors and foreign portfolio investors (FPIs). Each category will receive shares within its prescribed limits.
SEBI’s cash market framework
On the proposed changes to the cash market framework, Chauhan said the Securities and Exchange Board of India (SEBI) was considering several options and that NSE would be comfortable with whichever framework the regulator ultimately chooses.
“Our job is to work with SEBI and incorporate its views into our operations,” he said.
Chauhan said trading volumes had remained subdued as Indian markets had moved sideways over the past two to three years. Such conditions typically generate lower activity than a sustained bullish market, he added.
Global wars, geopolitical developments and uncertainty linked to the new US administration have also affected investor risk appetite. However, Chauhan expects the market environment to improve as these factors ease.
“Improving market conditions should drive a change in transaction volumes,” he said, adding that stronger activity could emerge across transactions, indices and trading volumes.
Chauhan also said the impact of merchant discount rate (MDR) changes on UPI could affect trading volumes through the payment channel in the short term, although he expected the situation to stabilise over the long term.
NSE’s growth story
Chauhan highlighted the scale of NSE’s growth since it began operations in 1994. He said India’s market capitalisation had risen around 120 times from approximately ₹4 lakh crore when NSE started to around ₹480 lakh crore today.
The number of unique investors has also increased from around 10 lakh at the time to nearly 13 crore, while NSE now has around 27 crore accounts.
The exchange became larger than the Bombay Stock Exchange (BSE) within 11 months of starting operations and has remained ahead of its rival since October 1995, Chauhan said.
He described NSE’s expansion as part of India’s broader 32-year growth story. The exchange has moved from handling around 10,000 trades a day in its early years to processing approximately 2,200 crore orders in around six hours and 15 minutes on a good day.
Chauhan compared the scale with UPI, saying the exchange handles a volume of orders in days that is similar to the payment system’s monthly transaction count.
He also highlighted NSE’s technology infrastructure, saying its response time was in the range of 500–800 nanoseconds. “There is no similar system in the world at this scale and speed,” he said.
Diversification and future growth
Chauhan said NSE’s business spans equities, currencies, commodities, interest rates and electricity, along with newer areas such as electricity futures and the social stock exchange.
The exchange now has around 77% market share in electricity futures, he said. Bond index futures could also provide NSE with a significant opportunity once launched.
However, Chauhan stressed that NSE could not introduce new products without regulatory approval. He said the exchange’s vertically integrated technology platform allowed it to launch products through a “plug and play” model once the necessary permissions were in place.
He added that NSE owned its core technology across the spectrum, which remained a source of pride for India.
Chauhan said NSE’s growth would remain closely linked to the Indian economy. If India grows at 6–7%, the exchange would also benefit from that expansion, he said, adding that he expected NSE to benefit from India’s growth over the next 30–50 years.
He also said the Nifty had risen from a base of 1,000 to above 24,000. Including dividends, the index’s return could be around 28,000–29,000, he added.
The smaller size, however, has not dented investor interest, with both foreign investors and domestic institutions showing strong demand.
“There is a large number of investors seeking a large number of shares,” Chauhan said, adding that the exchange had limited shares to distribute despite the strong interest. The final anchor book allocation is expected to be known tomorrow.
He said the allocation would follow a fixed framework, with separate buckets for local mutual funds, non-mutual fund investors and foreign portfolio investors (FPIs). Each category will receive shares within its prescribed limits.
SEBI’s cash market framework
On the proposed changes to the cash market framework, Chauhan said the Securities and Exchange Board of India (SEBI) was considering several options and that NSE would be comfortable with whichever framework the regulator ultimately chooses.
“Our job is to work with SEBI and incorporate its views into our operations,” he said.
Chauhan said trading volumes had remained subdued as Indian markets had moved sideways over the past two to three years. Such conditions typically generate lower activity than a sustained bullish market, he added.
Global wars, geopolitical developments and uncertainty linked to the new US administration have also affected investor risk appetite. However, Chauhan expects the market environment to improve as these factors ease.
“Improving market conditions should drive a change in transaction volumes,” he said, adding that stronger activity could emerge across transactions, indices and trading volumes.
Chauhan also said the impact of merchant discount rate (MDR) changes on UPI could affect trading volumes through the payment channel in the short term, although he expected the situation to stabilise over the long term.
NSE’s growth story
Chauhan highlighted the scale of NSE’s growth since it began operations in 1994. He said India’s market capitalisation had risen around 120 times from approximately ₹4 lakh crore when NSE started to around ₹480 lakh crore today.
The number of unique investors has also increased from around 10 lakh at the time to nearly 13 crore, while NSE now has around 27 crore accounts.
The exchange became larger than the Bombay Stock Exchange (BSE) within 11 months of starting operations and has remained ahead of its rival since October 1995, Chauhan said.
He described NSE’s expansion as part of India’s broader 32-year growth story. The exchange has moved from handling around 10,000 trades a day in its early years to processing approximately 2,200 crore orders in around six hours and 15 minutes on a good day.
Chauhan compared the scale with UPI, saying the exchange handles a volume of orders in days that is similar to the payment system’s monthly transaction count.
He also highlighted NSE’s technology infrastructure, saying its response time was in the range of 500–800 nanoseconds. “There is no similar system in the world at this scale and speed,” he said.
Diversification and future growth
Chauhan said NSE’s business spans equities, currencies, commodities, interest rates and electricity, along with newer areas such as electricity futures and the social stock exchange.
The exchange now has around 77% market share in electricity futures, he said. Bond index futures could also provide NSE with a significant opportunity once launched.
However, Chauhan stressed that NSE could not introduce new products without regulatory approval. He said the exchange’s vertically integrated technology platform allowed it to launch products through a “plug and play” model once the necessary permissions were in place.
He added that NSE owned its core technology across the spectrum, which remained a source of pride for India.
Chauhan said NSE’s growth would remain closely linked to the Indian economy. If India grows at 6–7%, the exchange would also benefit from that expansion, he said, adding that he expected NSE to benefit from India’s growth over the next 30–50 years.
He also said the Nifty had risen from a base of 1,000 to above 24,000. Including dividends, the index’s return could be around 28,000–29,000, he added.
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