India's biggest stock exchange launches mega share sale

India's main stock exchange is offering its shares to the public for the first time, ending a decade-long wait for one of the country's most closely watched stock-market listings.

The National Stock Exchange, which operates the market where most Indian shares are traded, hopes to raise as much as 225.69bn rupees ($2.35bn; £1.75bn).

That would make it India's second-biggest share sale, behind the 2024 listing of Hyundai's Indian unit.

The sale offers investors a way to benefit from the rapid growth of India's financial markets. But it is taking place amid challenges, as rising oil prices, a weaker rupee and foreign-investor withdrawals weigh on Indian shares.

Those pressures have already affected the sale - the NSE cut the number of shares on offer by 15% last week after existing owners decided to sell less of their holdings, probably because its valuation was lower than expected.

The shares are priced at between 1,700 and 1,785 rupees each. The sale involves existing investors - including the State Bank of India, insurance companies and investment funds - reducing their stakes. The NSE is not issuing new shares and will not receive any of the proceeds.

Its listing comes ahead of another eagerly awaited Indian IPO. "This is a mega IPO which will be followed by another mega IPO, Jio Platforms," Gaurav Dua of Standard Chartered Securities told the BBC.

He said the large listings could put short-term pressure on the wider market by absorbing money that investors might otherwise spend on shares already being traded.

They could also revive India's IPO market after a slow first half of the year, when volatility and geopolitical tensions prompted some companies to delay their plans. Analysts believe major listings such as the NSE and Jio Platforms could push the amount raised this year above last year's total.

The NSE first sought approval to list in 2016, but its plans were delayed by a controversy involving market manipulation and governance failures.

Senior officials were accused of giving some brokers faster access to its trading system, potentially providing an unfair advantage.

The listing comes as the Nifty 50, the NSE's benchmark index of 50 leading Indian companies, has fallen by more than 11% this year.

But despite the current market weakness, analysts expect a strong interest in the IPO.

Investors may see the NSE IPO as a way to benefit from India's investment boom, as more households have moved beyond traditional assets such as gold and property and begun buying shares through trading apps.

"NSE remains a play on the long-term growth potential of India's capital market," brokerage ICICI Direct said, adding that its leading position, profitability and focus on technology made the business more resilient.

Its large market value could also attract both active investors looking for individual investment opportunities and passive funds that invest in the exchange through stock-market indices.

"India's capital markets present significant growth opportunities, supported by rising investor participation, increasing market capitalisation, expanding mutual fund assets and greater adoption of passive investment products," Indian firm Religare Broking said in a report.

But there are also risks.

The NSE is the world's largest derivatives exchange by the number of contracts traded. Derivatives allow investors to bet on future movements in shares, indices and other assets without owning them.

Indian regulators have tightened rules around such trading amid concerns about heavy losses among individual investors. Further restrictions - or a fall in speculative activity - could reduce trading volumes and the NSE's revenue.