NSE shares rise 2%, recover 20% from record low in less than a month. Why Motilal Oswal sees 19% upside

Shares of the National Stock Exchange (NSE) gained around 2% to hit a fresh record high, recovering around 20% from its record low level, which it hit less than a month back, with Motilal Oswal seeing more upside ahead.

NSE shares jumped to a lifetime high of Rs 1,965 apiece on Wednesday morning, with the company’s market capitalisation nearing Rs 5 lakh crore. Motilal Oswal set a target price of Rs 2,300 apiece, implying 19% upside potential, as the domestic brokerage initiated coverage on the stock this week with a ‘Buy’ rating.

The brokerage highlighted that India’s market cap-to-GDP ratio stands at 131% in FY25, compared to the US at 216% and Japan at 157%. Matching the US ratio would imply 1.65x the current listed market cap. Demat accounts meanwhile reached 24 crore by September 2026, which is 17% of the population, reflecting structural headroom for growth, the domestic brokerage said, adding that India’s 3% active-participation rate is low even against other emerging markets, so as financial literacy, digital onboarding and distribution improve, participation could rise structurally over the years.

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NSE is market leader in an under-penetrated ecosystem

Motilal Oswal noted that NSE is India’s largest exchange by turnover in the cash market (ADTO of Rs 1.1 lakh crore) and in equity derivatives (futures ADTO of Rs 1.6 lakh crore and options premium ADTO of Rs 57,700 crore in FY26). Its active client base of 4.6 crore in September 2026 represents only 3% of India’s population, the brokerage noted.

The number of investors aged less than 30 years rose from 22.6% of NSE’s individual investor base in FY19 to 38.4% in FY26. As this cohort matures over the years, the trading activities and ticket sizes of trades will only increase, it added.

NSE’s FY26 market share is 93% in cash, 99.8% in equity futures and 74.7% in equity options premium. Options contribute around 75% of transaction fees, cash around 12% and futures around 11%. NSE accounts for nearly 12% of global cash trades, ranking third behind only Shenzhen (SZSE) and Shanghai (SSE), and ranked 5th globally by options contracts traded in Q1 FY27, Motilal Oswal pointed out.Also read | Another billion-dollar IPO: After Jio and NSE, what should investors know about Mahanadi Coalfields?

Derivatives reset is regulatory, not structural

Derivatives reset is regulatory, not structural, according to Motilal Oswal. Options premium turnover rose from Rs 4 lakh crore in FY16 to Rs 191trillion in FY26, implying a 47% CAGR. SEBI’s F&O measures slowed activity in the second half of FY25, which recovered in the second half of FY26 before hitting the hurdle of prop regulations (July 2026) and the closing auction session (CAS) regulation (August 2026).

The domestic brokerage said that the favourable modification of CAS rules from December 7 onwards should lead to options volumes recovering to pre-CAS levels.

NSE earnings expectations

Motilal Oswal Financial Services expects revenue to rise from Rs 16,600 crore in FY26 to Rs 23,400 crore in FY29, implying a 12% CAGR. EBITDA is expected to clock a 13% CAGR over FY26-29, with margin expanding to 77% by FY29.

The domestic brokerage feels that the company’s profit should reach Rs 15,000 crore, reflecting a FY26-29 CAGR of 13%, and RoE should recover from 30% in FY26 to 43% by FY29.

NSE share price

NSE shares made their much-awaited market debut on September 24, listing at Rs 1,800 apiece on BSE. This marked a premium of less than 1% over the IPO price of Rs 1,785. Within an hour of the muted debut, the shares jumped over 5% from the IPO price to hit a high of Rs 1,878, pushing the market capitalisation as high as Rs 4.64 lakh crore, before the stock began to decline.

NSE shares dropped to Rs 1,640 apiece recently, their lowest level since listing. It recovered all losses later to rise above the listing price, hitting a 52-week high of Rs 1,965 on Wednesday.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.