The National Stock Exchange of India (NSE), the country's largest stock exchange, is preparing to file its draft IPO prospectus by the end of March 2026, marking a significant milestone in its prolonged journey toward public listing. SEBI Chairman Tuhin Kanta Pandey recently stated that the regulator is in advanced stages of granting the No Objection Certificate (NOC) for NSE's initial public offering, with the possibility of approval as early as January 2026.

Regulatory Progress and Timeline

The exchange is currently in early discussions with investment bankers and law firms to prepare the prospectus and assess investor interest. However, NSE has not yet disclosed the quantum of equity that will be offered to the public. The company's unlisted shares currently value NSE at approximately $55 billion. Formal appointments of advisors will be made after SEBI issues the no-objection certificate.

Prolonged Listing Journey Since 2016

NSE's IPO journey began in 2016 when it first filed draft papers with SEBI, but the process has been significantly delayed due to regulatory investigations and legal challenges. The primary obstacle has been allegations of unfair trading practices related to its co-location facilities, which allow traders to place servers physically close to the exchange's servers for faster market data access.

Key Regulatory Milestones

Recent Financial Performance

NSE's financial results for Q2 FY26 reflected the impact of regulatory settlements. The exchange reported a 33% year-on-year decline in consolidated profit after tax, falling to ₹2,098.00 crore from ₹3,137.00 crore in the same quarter of the previous year.

The ₹1,297.00 crore provision, including interest, was recognized in Q2 FY26 in connection with settlement applications related to co-location and dark fiber matters. After adjusting for this provision, NSE's adjusted PAT stood at ₹3,396.00 crore, reflecting a 16% sequential increase compared to the previous quarter.

Path Forward

With SEBI Chairman Pandey's recent statement that "no obstacle remains" in the way of NSE's IPO, the exchange appears to have cleared most major regulatory hurdles. The settlement applications filed with SEBI, totaling around ₹1,388.00 crore, are seen as removing the primary barriers to the IPO process. Once the NOC is granted, NSE plans to file its Draft Red Herring Prospectus (DRHP) and proceed toward listing, potentially ending nearly a decade-long wait for one of India's most anticipated public offerings.

National Stock Exchange shares experienced a significant rally in unlisted trading, surging 6% to cross the ₹2,000 threshold after regulatory clarity emerged regarding the exchange's much-anticipated initial public offering.

Share Price Movement and Trading Activity

NSE shares demonstrated strong momentum in Monday's unlisted trading session, with increased investor interest driving both price appreciation and trading volumes.

Sandip Ginodia, director at Altius Investech, noted a "pick-up in incremental demand and higher trading volumes in NSE shares over the weekend" following the regulatory developments.

SEBI's IPO Approval Update

The rally was triggered by comments from SEBI chairperson Tuhin Kanta Pandey, who indicated significant progress on NSE's IPO approval process. According to ANI reports, Pandey stated that the regulator is at a "very advanced stage" of granting the no-objection certificate for NSE's IPO, with potential clearance expected in January.

This development has rekindled investor interest in NSE shares, which have faced prolonged uncertainty regarding the IPO timeline.

Recent Performance Challenges

NSE shares have encountered significant headwinds in recent months, primarily stemming from regulatory changes and delayed IPO approval. The stock has predominantly traded below ₹2,000 since September, reflecting investor concerns about multiple factors affecting the exchange's business.

Hitesh Dharawat of Dharawat Securities highlighted the stock's volatility, noting that "NSE shares had rallied to around ₹2,400 last year before correcting to nearly ₹1,800 following the announcement of Q2 results and increasing derivative curbs from the regulator."

Regulatory Impact on Business Operations

SEBI's regulatory measures have created operational challenges for NSE, particularly in the derivatives segment. The regulator implemented several changes that have affected trading volumes and revenue generation:

• Ban on multiple weekly derivatives contracts from exchanges in November 2024
• Increased minimum contract sizes
• Enhanced regulatory oversight of equity derivatives market

These measures have resulted in reduced trading volumes and corresponding revenue impacts at the exchange level.

Market Expert Perspectives

Market analysts present divergent views on NSE's current valuation and future prospects. Dharawat expressed caution about the sustainability of current price levels, stating, "With expectations of dull Q3, we believe the current price levels may not be sustainable. The fair value of the shares lies in the ₹1,500-₹1,800 range, due to the recent limited growth in the capital markets segment."

Conversely, Ginodia maintains an optimistic outlook for post-listing performance. He emphasized that "NSE is currently trading at a discount to BSE and will list on the BSE. Given the possibility of a higher free float and potential inclusion in the Sensex from listing, the stock could see strong buying from passive funds post-listing."