NEW DELHI, June 20 — The National Stock Exchange’s proposed initial public offering (IPO), expected to raise nearly ₹30,000 crore through an offer-for-sale, could become India’s largest-ever public issue while drawing attention to the exchange’s dominant position in the country’s capital markets and its significant dependence on derivatives trading revenue, according to an analysis by Zerodha’s Daily Brief.
Describing the NSE as “the beating heart” of India’s financial market infrastructure, the analysis said the exchange sits at the center of a rapidly expanding investor ecosystem.
As of March 2026, India had nearly 13 crore registered investors, up from just over 9 crore two years earlier.
“India is now the fourth-largest equity market in the world by market capitalization,” the report said, noting that the country added approximately 4 crore new investors over the past two years.
The analysis highlighted that NSE generated approximately ₹16,600 crore in operating revenue during fiscal year 2026, with nearly 79% derived from transaction charges collected on trades executed through its platform.
Equity options alone generated around ₹10,000 crore, accounting for roughly 60% of the exchange’s total revenue.
“The mega-earner, however, was equity options, which singularly generated ₹10,000 crore — or 60% of NSE’s total revenue,” the report said. “Much of that was the result of a single instrument: the Nifty 50 weekly options contract.”
However, the report noted that this dependence leaves the exchange highly sensitive to regulatory changes.
It pointed to the Securities and Exchange Board of India’s (SEBI) derivatives market reforms introduced in October 2024, which reduced weekly expiries and increased lot sizes, resulting in a decline in trading activity.
“These measures reduced retail speculation, as intended. Derivatives volumes fell sharply, and NSE’s revenue fell with them,” the analysis said.
Revenue from operations declined from approximately ₹17,100 crore in FY25 to ₹16,600 crore in FY26, while profit fell from roughly ₹12,200 crore to ₹10,000 crore.
Despite the decline, the report emphasized NSE’s strong profitability. The exchange spent about ₹6,000 crore during FY26 while still reporting nearly ₹10,000 crore in profit, representing a margin of approximately 51%.
“For a company with ₹16,600 crore in revenue, that is exceptionally lean,” the report said while discussing employee expenses, which totaled ₹790 crore. “This just isn’t a people business. NSE’s product is a matching engine: software that processes millions of orders per second.”
The analysis also highlighted the importance of NSE Clearing Ltd. (NCL), the exchange’s subsidiary responsible for guaranteeing trade settlements.
According to the report, NCL clears about 88% of all cash market trades and 91% of equity derivatives transactions in India.
“It is the silent guardian ensuring the sanctity of every trade on the NSE,” the report said.
The analysis further noted that NSE distributed ₹8,660 crore in dividends during FY26, reflecting a payout ratio of 84%, while maintaining investments worth ₹64,771 crore on its balance sheet.
Summarizing the exchange’s business model, the report said, “NSE has as privileged a place as the financial markets can offer. It earns whether markets go up or down, and whether individual trades are profitable or not.”
The report added that, barring a major collapse in India’s financial markets, “few things can touch this giant.” (ANI)
About The Author
