NSE IPO threatens India's unlisted share boom, with half of trades at risk
The upcoming listing of the National Stock Exchange of India Ltd. (NSE) could give the country's primary market a major boost, but it may also deal a big blow to the growing trade in unlisted shares, Bloomberg reported.
NSE, operator of the world's busiest derivatives market, accounts for roughly half of the trading volume in India's unlisted share market, according to an estimate by trading platform UnlistedZone. Its initial public offering could lead to a sharp fall in activity, leaving platforms that facilitate such trades searching for the next big opportunity.
The unlisted market gained popularity as India recorded consecutive records in IPO proceeds over the past two years. Wealthy individuals and funds increasingly used the market to invest in companies that were preparing to list. This growing interest also led to the rise of online platforms and specialist brokers that helped connect buyers and sellers.
NSE became a key part of this market because of its size, profitability, dominant position and disclosures, which were similar to those made by listed companies. Its smaller listed rival, BSE Ltd., also gave investors a reference point for valuing NSE shares. Delays in NSE's own listing further extended the period during which its shares could be traded privately.
This helped turn what was once a small part of India's financial system into a mainstream investment avenue. It also created a network of intermediaries that helped investors with regulatory approvals, documentation and the transfer of unlisted shares.
The exchange had 231,378 shareholders ahead of its IPO, more than several listed companies. This was a significant increase from fewer than 80 shareholders in 2016, according to its December 2016 draft prospectus. NSE also made monthly disclosures on share transfers until last year. Its last disclosure in March 2025 showed nearly Rs 15 billion ($170 million) worth of shares changing hands during the month.
The absence of NSE could make it harder for platforms that have grown around the unlisted market to maintain investor interest. There are currently no other issuers offering the same combination of size, familiarity and liquidity as NSE. This could push investors towards smaller companies, which generally have less financial disclosure and thinner liquidity.
Rajan Shah, founder of 3A Capital Services, which operates a platform for dealing in unlisted shares, expects interest in the market to remain selective. Companies in areas such as space technology, aerospace, defence, data centres and other new-age industries could continue to attract investors.
Companies currently drawing market interest include Sterlite Electric Ltd, Indofil Industries Ltd, Krasny Defence Technologies Ltd, Berar Finance Ltd, Kineco Ltd, Indian Potash Ltd and Garuda Aerospace Ltd, Shah said.
However, investing in unlisted shares has not always been profitable. Investors in some high-profile companies, including HDB Financial Services Ltd and Tata Capital Ltd, suffered losses. Those who bought NSE shares over the past year may also enter the IPO with losses.
Umesh Paliwal, co-founder of UnlistedZone, said the unlisted market has also delivered outsized returns in some cases. However, the outcome depends heavily on when investors enter and the valuations at which they buy.- EndsPublished By: Jasmine anandPublished On: Sep 15, 2026 13:44 IST
