Global brokerage Jefferies has started tracking the National Stock Exchange (NSE) with a positive view, setting a price target of ₹2,085. The report highlights potential growth from new segments like gold and commodity trading, noting that the exchange is working to reduce its heavy reliance on revenue from equity derivatives.
Global brokerage Jefferies has initiated coverage on the National Stock Exchange of India (NSE) with a positive outlook and a price target of ₹2,085. As the NSE is not listed on the main stock exchanges, investors trade its shares through the unlisted market, where liquidity and pricing can differ from mainstream stocks. The brokerage’s entry into tracking the exchange marks a significant update for those looking at this unlisted giant.
The optimism from the brokerage is partly based on recent changes by the Securities and Exchange Board of India (SEBI). The regulator recently restored the 30-minute volume-weighted average price (VWAP) for expiring derivatives contracts. For traders and the exchange, this provides a more stable closing process for derivatives, reducing the volatility that previously impacted the market during closing auctions. This regulatory adjustment is seen as a move that clears some uncertainty for the exchange.
While the exchange has historically depended heavily on equity options for a large chunk of its revenue, the brokerage notes a strategic shift toward diversification. The NSE is expanding into areas like electronic gold receipts, commodity futures, and mutual fund ordering platforms. If these segments gain traction, they could provide a new, stable income base that is less sensitive to the ups and downs of equity trading volumes.
The brokerage anticipates that the exchange's operating margins could rise to 78% by the financial year 2029, up from 76% in 2026. This projection assumes that the NSE can effectively manage its costs as it expands its technology infrastructure. The tech division, which manages the systems allowing for fast trading and colocation services, is expected to see steady growth.
However, investors should be aware of the risks. The most significant threat remains the regulatory environment. Because the NSE relies heavily on trading volumes from the futures and options (F&O) segment, any further strict rules from SEBI aimed at curbing retail speculation in derivatives could hurt transaction revenues. Additionally, as a digital exchange, the NSE faces operational risks, including the potential for cybersecurity threats or technical glitches that could interrupt trading and dampen market sentiment.
Investors tracking the NSE should monitor how well the exchange succeeds in diversifying its revenue away from its core equity options business. Other important updates to watch include the actual volume growth in new product categories like gold and commodities, and any further regulatory announcements regarding derivatives trading rules. Because this stock is traded in the unlisted market, investors should also be mindful of the specific risks related to buying and selling shares that are not actively traded on the main stock exchange platforms.