The recent surge in the National Stock Exchange (NSE) stock prices reflects soaring investor demand fueled by anticipation of an upcoming listing and favorable valuations. This momentum is further enhanced by NSE’s declaration of a substantial dividend, coupled with remarks from its CEO dismissing concerns about market share losses to rival BSE as a thing of the past.
Since May 6, following the release of its earnings report for the March quarter, NSE’s shares in the unregulated market have climbed by 9-10%, reaching record highs of ₹1,680-1,700. This surge comes amid a growing interest from both retail and high-net-worth investors, who are vying for unlisted shares. Narinder Wadhwa, Managing Director of SKI Capital Services, noted that recent price jumps have led to disrupted transactions, explaining, “A deal I had was unable to go through because the seller backed out after the price increased from around ₹1,550 to ₹1,700.”
The past two weeks have seen a notable increase in share demand, attributed to the imminent listing and the attractive valuations of NSE shares. Wadhwa pointed out that the limited availability of shares — as larger stakeholders hold onto their stocks — has created a significant supply crunch. As a source familiar with the situation remarked, many trades have fallen through because parties have entered agreements without issuance of Delivery Instruction Slips (DIS). When share prices shift dramatically, these unregulated over-the-counter transactions are prone to interruption, in contrast to the secured environment of exchange-traded markets.
Despite requesting clarity, NSE did not respond to inquiries about the transactions that collapsed in the unlisted market. However, a regulatory circular issued earlier this year has made transferring NSE shares simpler, reducing the transfer time from six months to just one day. This regulatory change has expanded the investor base dramatically from 22,000 in March to over 100,000.
The demand surge is intensified by the announcement of a ₹35 per share dividend, leading analysts, like Viral Mehta from IIFL Capital, to indicate a widening gap between supply and demand. Institutional shareholders’ reluctance to sell amid expectations of a listing has led to this spike. He emphasized that the disparity in valuations — NSE’s trading at a forward price-to-earnings (P/E) ratio of 35 compared to BSE’s 52.75 — has contributed to this interest. Interestingly, BSE’s stock has also responded positively, climbing about 12% since May 6 after it recommended a ₹23 dividend per share.
NSE recently reported its operating profit margin for Q4FY25 increased to 74% from 66% a year prior, despite an 8% year-on-year decline in overall profit to ₹2,799 crore. The board has proposed a dividend that requires shareholder approval, although the share price has continued to rise amid speculation regarding the approval of its long-awaited IPO, stalled since 2016 due to prior governance issues.
As the NSE aims to recover market share lost to BSE, CEO Ashishkumar Chauhan assured stakeholders that potential losses appear to have stabilized. Official data indicates that NSE’s share in equity options fell from 96.9% in FY24 to 87.4% in FY25, primarily due to regulatory changes that favored BSE.
In summary, the NSE is experiencing significant upward momentum in its share prices, driven by investor optimism over forthcoming listings and lucrative valuations, despite challenges in the unregulated market affecting transaction reliability.
Original Source: https://www.livemint.com/news/boom-in-unlisted-nse-shares-strains-grey-market-trades-national-stock-exchange-11747916974804.html
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Publish Date: 2025-05-23 05:50:00
