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The National Stock Exchange (NSE) saw a significant increase in trading activity recently. In March, over 7 million shares of the unlisted NSE were traded. This marks the second-highest monthly trading volume since the marketplaces started sharing transfer information in January 2021.
How NSE is growing Actively in the Stock Exchange?
In March, the National Stock Exchange (NSE) achieved a significant milestone by becoming the second-highest monthly volume trader of unlisted shares in the market, second only to Adani Enterprises. The average price of all trades combined was Rs 2,947 per share, slightly lower than February's Rs 2,980, but still 22% higher than last year.
This surge in trading activity greatly impacted the total turnover volume of NSE, which amounted to Rs 2,113 crore in March. Despite this impressive turnover, NSE trailed behind Adani Enterprises, which earned around Rs 8,400 crore during the same period. It's worth noting that NSE has consistently ranked among the top five most actively traded stocks in terms of value since December, despite the ongoing uncertainty surrounding its long-awaited initial public offering.
Why such strong demand for NSE shares?
NSE is the top stock exchange in the market, mainly because it holds a whopping 93 percent of the market share in the equity segment.
This helped the National Stock Exchange (NSE) establish a monopoly in the equity derivatives market and a major player in the currency derivatives market. With increasing regular trades fluctuating share prices of NSE is making good profits. Its operating profit margin stands close to 70 percent, making it the leading derivatives platform worldwide, as per data from the Futures Industry Association.
What is the reason behind the Surge in Investments in NSE?
The increase in investment in NSE was not a short-term movement. It took this popular stock exchange time to earn the trust of investors. Factors like stock prices in NSE, liquidity, and transparency played a crucial role in achieving this milestone.
Moreover, the significant rise in the wealthy investors in NSE over the last five years has also contributed to its success. In FY 21, only 650 wealthy individuals owned NSE shares. Now, that number has surged to 4,300, with prominent figures like DMart founder Radhakishan Damani, industry leaders, and many respected stock market investors among the shareholders.
Are the High Transactions in NSE Done to Evade Tax?
In March, foreign portfolio investors bought 13.6 lakh shares, while domestic investors bought around 29 lakh shares. However, there were also a good number of shares sold by investors. Non-resident Indian (NRI) investors sold nearly 4.2 million shares, with the highest price for a share being Rs 3,300 and the lowest being Rs 2,800.
If we compare it to 2023, there is a big difference between the highest and lowest prices. But this month, the gap narrowed down to about 20 percent. Last year, it was sometimes as high as 50-200 percent.
This fluctuation in data made leading brokers wonder if some transactions in the NSE of India were only done to avoid paying taxes or to hide money as trading profit.
NSE's Revenue and Profit have grown in the last 9 months.
Here are the revenue and profit figures for the National Stock Exchange over the past nine months, showcasing its exponential growth.
NSE's consolidated revenues surged by 50 %to Rs 8,320 crore for the nine months ending December 31, 2022.
Consolidated net profit also increased by around 55 %, reaching Rs 4,590 crore during the same period.
The operating profit margin stood impressively at 73%.
Earnings per share (EPS) were reported at Rs 109, suggesting an estimated figure of approximately Rs 144 for the full year.
What Does the Future Hold for NSE?
The rise in trades on the NSE unlisted shares presents an opportunity for investors to see further growth in the National Stock Exchange. The current number of 7.1 million unlisted shares on the NSE could potentially rise shortly.
Additionally, the increased trading is strengthening NSE's position in India. Despite fluctuations in share prices in NSE and other challenges, NSE's resilience and strategic moves have pushed it to new levels. We can look forward to a bright future for NSE with significant increases in trading values and profit margins in the coming time.
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