India's National Stock Exchange (NSE) has received bullish backing from Wall Street brokerages, with institutions believing that the exchange's leading position will be further consolidated as India's capital markets continue to deepen.
Morgan Stanley and JPMorgan have initiated coverage on NSE shares with overweight ratings. Since its listing in September, the stock has traded below its issue price for most of the time; Indian domestic institution 360 ONE Capital Markets also recommends buying. The bullish stance from institutions stems from confidence in the long-term expansion of India's capital markets, and concerns about a short-term slowdown in derivatives growth have not changed this judgment.
As the world's most populous nation, India's investor base continues to expand and trading activity is rising, benefiting this leading exchange regardless of whether the broader market rises or falls.
Morgan Stanley is the most optimistic, setting a 12-month target price of 2,315 rupees, implying up to 30% upside from last Friday's closing price. JPMorgan has a target price of 2,130 rupees, while 360 ONE has a target price of 2,100 rupees. Affiliates of all three institutions participated in NSE's IPO underwriting.
Morgan Stanley calls NSE "the engine of India's capital markets" and a high-quality vehicle for exposure to the financialization of household savings and the continued flow of funds into equity markets. India's market penetration remains low, with only 3.2% of the working-age population participating in NSE spot trading and 0.7% trading stock derivatives.
Brokerages believe that NSE's monopoly position combined with its asset-light model can support a premium valuation. NSE holds over 90% market share in spot equities and near-total dominance in stock futures and single-stock options; its index options share is stable at around 65%.
Jefferies stated that new businesses such as commodities, fund subscription platforms, and electronic gold receipts can reduce NSE's reliance on stock options and are expected to contribute about 15% incremental growth to revenue and profit by fiscal year 2030.
360 ONE analyst Swarnabha Mukherjee wrote in a research note: "A recovering capital market environment, combined with growth potential from other segmented businesses, will further boost earnings."
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