NSE’s proposed IPO is poised to value India’s largest stock exchange at around Rs 5 lakh crore, crystallising a behemoth franchise into a listed play on the country’s capital-market deepening story while throwing up two critical scenarios that investors must track closely.

National Stock Exchange of India Ltd (NSE) has filed its DRHP for an IPO structured entirely as an Offer for Sale (OFS), with up to 148.9 million equity shares, around 6% of outstanding equity, being offloaded by existing shareholders. Key sellers include State Bank of India, MS Strategic (Mauritius), Canada Pension Plan Investment Board, Aranda Investments (Mauritius) and Bank of Baroda, signalling a broad-based monetisation by marquee financial institutions.

Centrum Institutional Research characterises NSE as a behemoth, underlining its dominant position with about 93% market share in cash equities, nearly 100% in equity futures and roughly 72% in equity index options turnover in FY26, alongside near-monopolistic shares in currency derivatives and a commanding presence in corporate bonds clearing.

NSE valuation math

Assuming a market capitalisation of Rs 5 trillion (lakh crore), the implied valuation works out to around 36x FY28E EPS under the base case and about 35x under the bull case, reflecting a rich multiple for a high-margin, high-ROE exchange franchise.In the second scenario of a higher market capitalisation of Rs 5.5 trillion, the implied multiples rise to nearly 40x and 38x FY28E EPS under the base and bull cases respectively, underscoring how sensitive the stock would be to growth delivery and regulatory outcomes.

Centrum notes that revenue from operations grew at a strong 24% CAGR over FY21–FY26, with EBITDA and net profit rising at 23% CAGR and margins consistently above 70% and ROE above 30%, even after a softer FY26. “We expect earnings momentum to recover from FY27 onwards, with net profit projected to grow at ~16% CAGR over FY26–FY28E,” the report states, arguing that structural drivers remain intact despite cyclical and regulatory headwinds.
Under the first scenario, the market effectively validates NSE’s Rs 5 lakh crore valuation as a justified structural premium on India’s financialisation story and the exchange’s entrenched market leadership. NSE currently services over 129 million unique registered investors, enables trading across 3,228 securities and instruments, and, along with its clearing arm NCL, captures over 85% of corporate bond trading value settled via clearing corporations in India.
The DRHP-backed projections assume that revenue growth normalises after the FY26 blip, with operating revenue expected to rise from Rs 166 billion in FY26 to Rs 218 billion by FY28, while EBITDA recovers from Rs 133 billion to about Rs 192 billion and ROE moves back towards the high-30s. In this construct, the IPO price and subsequent listing sustain elevated multiples on the back of:
Robust transaction-led income, which contributed nearly 80% of operating revenue in FY21–FY26 and remains the primary earnings engine.

Continued cash-market deepening, with turnover having grown six-fold from Rs 50 trillion in FY16 to Rs 280 trillion in FY26, aided by rising investor penetration and higher market-cap-to-GDP ratios.

Also Read | NSE IPO: Nithin Kamath explains why India has few businesses like this ‘cash generating machine’

Centrum highlights NSE’s innovation and infrastructure edge—pioneering fully automated trading (NEAT), leading on T+1 and T+0 settlements, and running an integrated risk architecture anchored by a Core Settlement Guarantee Fund of about Rs 130.8 billion—as critical to sustaining this premium franchise.

In such a benign scenario, any valuation at or above Rs 5 lakh crore is seen as a structural play, where investors effectively pay up for a compounding cash-generative asset tied to India’s rising household incomes, the shift from physical to financial assets, growing domestic institutional flows and steady FPI participation.

The second scenario the report flags is less benign: here, higher implied multiples at Rs 5–5.5 trillion market cap collide with regulatory tightening and volume moderation, forcing the market to reassess NSE’s valuation comfort zone. Nearly 80% of NSE’s revenues are linked to trading-related activities, with options alone contributing around 60% of operating revenue and futures another 9%, making the franchise acutely sensitive to derivatives volumes.

A large part of this activity is driven by proprietary traders—who account for about 50.7% of equity options premium turnover—and by algorithmic trading, which contributes roughly 55% of cash market volumes and 66% of equity derivatives trades on NSE. “Any regulatory or tax changes that reduce the attractiveness of derivatives trading or constrain algorithmic and proprietary trading activity could adversely impact market volumes,” Centrum cautions, pointing to STT hikes and tighter RBI exposure norms as key near-term swing factors.

The report notes that the Union Budget FY27 has raised STT on equity futures sales from 0.02% to 0.05% of contract value, increased STT on options selling from 0.10% to 0.15% of premium value, and pushed STT on option exercise from 0.125% to 0.15% of intrinsic value, explicitly aimed at curbing excessive short-term speculation. In parallel, revised RBI norms effective July 1, 2026, are expected to increase capital consumption and funding costs for banks and intermediaries exposed to capital markets, potentially dampening leverage and consequently trading volumes, especially in derivatives.

Also Read | NSE IPO: 10 key things investors need to know about India’s largest IPO in history

Against this backdrop, Centrum builds in a slower 9–11% CAGR for equity options premium turnover between FY26 and FY30, even as other segments like currency and commodity options are projected to grow at 20–25% CAGR, and corporate bonds and exchange-traded currency/commodity futures at mid- to high-teens. If these regulatory headwinds weigh more heavily than anticipated on derivatives volumes, the market may struggle to sustain a Rs 5 lakh crore-plus valuation, especially given NSE’s concentrated revenue dependence on top trading members, where the top five and top ten clients contribute around 32% and 47% of revenue respectively.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Eurozone households’ inflation expectations for the year ahead fell back in May, as consumers reacted to easing tensions in the Middle East, likely reassuring European Central Bank policymakers who fear an uncontrolled rise in price pressures.

Consumers say they expect prices to rise by 3.5% over the next 12 months, down from 4.0% in April, according to an ECB survey of 19,000 adults from 11 eurozone countries published on Friday. The survey was conducted between May 7 and June 1, before news of the tentative agreement between the U.S. and Iran to end the fighting.

Copyright ©2026 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Goldman Sachs’ Indian equity portfolio, held through its global funds, declined 6% in CY26, falling from Rs 9,014 crore in December 2025 to Rs 8,470 crore as of June 25, 2026. As of the March 2025 quarter, the portfolio comprised about 46 stocks, of which around 26 were negative performers. So far in CY26, 18 stocks have declined between 10% and 44%, with the top six laggards falling 25–44%.

However, despite the overall decline, eight stocks bucked the trend, delivering gains of 20–85% over the same period. We also highlighted one newly added stock in the March 2025 quarter. (Data Source: ACE Equity, Trendlyne)

Jefferies’ Global Head of Equity Strategy Chris Wood is warning that the AI trade will eventually be broken not by a sudden collapse in demand for chips, but by a market-wide realisation that hyperscalers and leading AI labs cannot earn an adequate return on the vast capex they are undertaking. He sees concerns over “malinvestment” as the specific risk that will finally trigger the end, or at least a painful pause, in the AI boom.

In his latest newsletter Greed & Fear, Wood describes the ongoing AI build‑out as “the most dramatic capex cycle” he has ever seen, driven by hyperscalers and foundries racing to ramp data‑centre and compute capacity. TSMC, for instance, has lifted its capex guidance for 2026 to about US$56 billion from US$41 billion last year, with Jefferies’ Taiwan partner Fubon Research now projecting US$65–70 billion of capex in 2027.

This surge in investment is already translating into boom‑like macro conditions in Taiwan, with real GDP growth hitting 14.55% year‑on‑year in 1Q26 and export orders up 53.4% year‑on‑year in the three months to May. Wood notes that AI‑related demand now accounts for an estimated 31% of TSMC’s revenues in 2026, underscoring just how concentrated the cycle has become in AI infrastructure.

Also Read | 3 AI stocks outweigh all of India: Why this concentration is sounding EM alarm bells

Jevons Paradox and “Picks and Shovels” Winners

Wood frames the AI demand story through the lens of Jevons Paradox: as token costs fall and efficiency improves, total compute consumption rises instead of falling. “The increased demand triggered by cheaper prices should be good for the picks and shovels plays,” he writes, arguing that DRAM and memory suppliers are the primary equity beneficiaries three and a half years into the AI capex arms race.

He cites Micron CEO Sanjay Mehrotra’s comment that “memory has evolved from a peripheral component into the core engine driving productivity in the AI era,” adding that the big three DRAM makers now have sufficient leverage to lock in long‑term sales agreements. Micron has already signed 16 strategic customer agreements covering roughly 20% of its DRAM volume and a third of its NAND volume, typically with five‑year tenors — evidence, in Wood’s view, of structural change in the industry.

The Commoditisation of AI Models

A key contextual risk is the rapid commoditisation of large language models, particularly in the consumer and, increasingly, corporate markets. Wood highlights the launch of GLM‑5.2 by Hong Kong‑listed Z.ai, formerly Zhipu AI, noting that informed sources describe the new model as “almost equal to Anthropic” for corporate use at just one quarter of the cost per token.
This comes against a backdrop of a backlash against “tokenmaxxing” and explosive growth in cheaper Chinese models on platforms such as OpenRouter. In the week ended 21 June, top Chinese AI models processed 21.37 trillion tokens on OpenRouter, up from 4.37 trillion in late April, versus 5.76 trillion tokens for the top US models. That shift in volume, he argues, is already signalling a commoditised landscape and mounting pressure on the economics of premium Western AI providers.

Malinvestment in AI

Wood is explicit that the key vulnerability in the AI trade is not a classic semiconductor oversupply shock but the eventual recognition that the hyperscalers and leading AI labs will fail to earn a satisfactory return on their investment. “GREED & fear is personally convinced that concerns about malinvestment will be the most likely trigger for an end to the AI trade, or at least for a protracted pause to refresh,” he writes.
The danger, in his view, lies in circular funding arrangements and aggressive capacity expansion built on optimistic monetisation assumptions. He points to structures such as Nvidia financing OpenAI so that OpenAI can in turn buy more Nvidia chips — a feedback loop that works as long as investors are willing to bankroll the ecosystem but could unwind sharply once doubts over long‑term returns take hold.

Why Traditional Supply‑Side Risks Are Secondary

Historically, semiconductor cycles have tended to end with abrupt increases in supply and inventory gluts. Wood believes the current cycle is different. “The key point to note for now is that this is the way the cycle is most likely to end rather than because of a sudden increase in supply, as has traditionally been the case in semiconductors,” he argues, emphasising that DRAM makers now command far greater pricing power.

The dominant three DRAM producers have been able to negotiate multi‑year strategic customer agreements, and Wood relays market chatter that Korean memory makers are already regretting locking in long‑term terms because they expect chip prices to rise further. In such a structurally tight industry, the more plausible end‑of‑cycle trigger is not oversupply but investor capitulation over capital discipline and earnings visibility in the AI stack above memory.

Despite these structural concerns, Wood emphasises that there is “zero sign of AI capex slowing” yet. He links ongoing spending to US banking deregulation under the Trump administration, citing Alvarez & Marsal’s estimate that recent regulatory changes will unlock US$2.5 trillion in additional lending capacity across the US banking system, including US$1.1 trillion unlocked in the last two quarters.

Portfolio Implications For Wood

Importantly, Wood is not calling for an immediate collapse in AI‑linked equities; instead, he is re‑positioning towards hardware and memory names that he believes will remain long‑term beneficiaries even if the AI trade endgame is defined by capital‑return disappointments higher up the stack.

He is lifting exposure to tech hardware across GREED & fear’s model portfolios, adding SK Hynix and Kioxia with initial 4% weightings in the global long‑only book and increasing the allocation to Samsung Electronics. Alphabet and Alibaba are being removed from the global portfolio, reflecting a deliberate tilt away from big‑cap platform plays towards “picks and shovels” beneficiaries of the AI capex cycle.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The markets traded in a subdued and range-bound manner through the week and ended flat with modest gains. Nifty oscillated in a relatively narrow 476.65-point range, touching a high of 24,261.60 and a low of 23,784.95 before settling at 24,056.00. Volatility remained largely contained, with the India VIX rising 0.62% to 13.05. The benchmark index closed the week with a marginal gain of 42.90 points (+0.18%), reflecting the ongoing lack of directional conviction.

The broader technical structure remains cautious despite the index stabilizing above its recent lows. Nifty is currently confronting a formidable resistance zone between 24,160 and 24,500, where the 100-day moving average (24,161) and the 100-week moving average (24,504) exist. This cluster makes the zone technically significant and is likely to act as a stiff resistance area. Unless the index registers a decisive move above this resistance band, the ongoing rebound is likely to remain tentative in nature.

The markets are likely to begin the coming week after a trading holiday on Friday while adjusting to the global trade setup. It is likely to open on a tepid note, but sustained upside will require Nifty to decisively overcome the 24,160-24,500 resistance zone. Immediate resistance levels are placed at 24,160 and 24,500, while supports come in at 23,900 and 23,750. Any move beyond the resistance cluster may trigger stronger short-covering and improve the medium-term outlook, whereas failure to clear this hurdle could keep the index confined to a broad consolidation.

The weekly RSI stands at 48.01 and remains neutral without showing any notable bullish or bearish divergence against price. The weekly MACD continues to stay bullish and above its signal line. The latest weekly candle is that of a Doji; it reflects indecisive price action, underscoring the ongoing tug-of-war between buyers and sellers near an important resistance area.

From a pattern perspective, Nifty continues to trade within a broad consolidation after witnessing a sharp corrective decline earlier this year. The index has now entered a technically important congestion zone where multiple moving averages exist. The inability to reclaim the 100-day and 100-week moving averages keeps the near-term technical bias guarded. A sustained move above this resistance cluster would significantly strengthen the technical structure, while continued rejection from these levels could prolong the consolidation phase.
Overall, the market is entering a technically important phase where risk-reward remains evenly balanced. Fresh aggressive buying should be avoided until the index convincingly clears the 24,160-24,500 resistance band. At the same time, the presence of strong long-term support argues against adopting an overly bearish stance. Traders should continue with a selective, stock-specific approach while maintaining disciplined risk management. Protecting capital, avoiding excessive leverage, and waiting for a confirmed breakout before turning aggressively bullish would remain the most prudent strategy for the coming week.

The Relative Rotation Graph (RRG) shows that the Nifty Pharma Sector Index has rolled inside the leading quadrant. Along with that, the Media and Midcap 100 Index are also inside this quadrant. These groups may outperform the broader Nifty 500 Index relatively.

The Nifty Energy Index has rolled inside the Weakening quadrant. The Nifty PSE, Metal, and Infrastructure Indexes are also inside this quadrant. The overall relative performance of these groups may continue to slow.

The Nifty IT sector continues to languish inside the lagging quadrant. The Nifty Services, PSU, Bank, Financial Services, and Auto Indexes are also inside the lagging quadrant, but they are seen improving their relative performance against the broader markets. The FMCG and the Realty Index continue to be inside the improving quadrant, with the FMCG Index seen giving up gradually on its relative momentum against the broader markets.

Companies should focus on building sustainable businesses, improving profitability and creating long-term value rather than merely chasing higher share prices, NSE MD and CEO Ashish Chauhan said on Friday.

Addressing the 9th JITO Incubation & Innovation Foundation (JIIF) Day event, he said a company’s market valuation should be a reflection of its business performance and growth.

The objective of an entrepreneur should be to expand the business and increase shareholder value through stronger fundamentals, he suggested.

“If the company’s profit increases, the share value should increase. You cannot keep increasing value without creating actual business growth,” Chauhan said.

He said entrepreneurs need to remain focused on their core business rather than getting influenced by market trends or peer pressure.

Companies that consistently grow and deliver results eventually get recognised by the market, he added.
The public markets reward profitable businesses with a valuation that private balance sheets cannot match. A company earning an annual profit of Rs 2 crore, he said, could command a market capitalisation of Rs 40 to 50 crore once listed, giving the promoter room to raise capital, bring in partners and expand operations. Listing also gives a company its own currency, Chauhan said.

A listed promoter can use stock to acquire other businesses, draw in partners and reward staff through stock options, he said, citing the early use of employee stock options at Infosys by NR Narayana Murthy and Nandan Nilekani to attract talent the company could not otherwise have hired.

He also highlighted the importance of innovation in entrepreneurship, saying innovation is not limited to major technological breakthroughs but can happen through small improvements in everyday processes.

“Whatever you do, if you do it differently and in a better way, that is also innovation,” Chauhan said.

Chauhan said the journey of building a business involves significant challenges and persistence, with many founders facing years of struggle before achieving success.

On the listing journey, he said getting listed on the stock exchange is not as difficult as often perceived, but companies need to focus on compliance, governance and transparency after entering the public markets.

Capital markets provide opportunities for companies to raise funds and grow, but businesses need to maintain discipline and focus on long-term value creation, Chauhan stated.