On Tuesday, July 7, a sudden huge fall was recorded in the shares of the stock exchange BSE. By 3 pm, BSE shares had fallen by 3.23 percent to Rs 3680.20. The reason for this decline is the much awaited IPO of the National Stock Exchange (NSE) and a latest report by the leading brokerage firm Jefferies. Jefferies clearly believes that when it comes to the business of both the exchanges, NSE is much stronger and diversified.
NSE’s unilateral dominance in the market
Jefferies has said in its report that the business of NSE, which is going to launch an IPO of Rs 30,000 crore, is more spread than that of BSE. Citing data from the draft paper submitted to SEBI, the brokerage said that except index options and commodity F&O, NSE’s market share in almost every segment is more than 90 percent. The company’s Clearing Corporation (NCL) also has a huge market share of 88% in the cash market and 91% in F&O. NSE has not limited itself to just trading, but has also created an excellent global level tech product suite. On the basis of this technology and data related services, it has got 13 percent of its total revenue in the financial year 2026.
New trend of trading and dominance of options
There has been a rapid change in the way people invest and trade in the Indian stock market. Between financial years 2020 and 2026, while cash market turnover grew by 19 per cent annually, equity options trading saw an impressive 56 per cent annual growth. The situation is that in the financial year 2026, the average daily turnover of options premium reached 70 percent of the daily cash market turnover.
This is the reason why now the share of derivatives in the total earnings of Indian exchanges has increased to 70 percent. This simply means that the exchange’s earnings are now more dependent on market volatility than market prices. An interesting fact is that today more options contracts are traded in India than in America, but their total value (premium) is only one-fifth of that in America.
IPO will become a lifeline for government insurance companies
This mega IPO of NSE will bring big relief for many government general insurance companies. According to the report, PSU general insurance companies will sell 1.1 percent of their stake in this ‘offer for sale’. Currently, the solvency of three of the four major multi-line insurance companies—Oriental, National and United—is well below the regulatory limit (1.5 times). By selling shares of NSE, these companies will get huge amount of cash, which will see a big improvement in their financial condition and solvency capital.
Excellent track record of profits despite controversies
NSE has also faced financial setbacks in recent years due to some major legal cases. In the case of co-location and dark fiber, a provision of Rs 1,390 crore had to be made in the financial year 2026. At the same time, Rs 670 crore was paid to SEBI for the settlement of TAP case in the financial year 2025. These huge payments have had a direct impact on the operational profit (EBITDA) of NSE.
However, Jefferies says that the settlement fee paid to SEBI is only a one-time expense. If we remove this expense and look at the basic business of the exchange, then the operating EBITDA margin of NSE remains stable at around 76-77 percent even today.
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