National Stock Exchange of India Ltd., the operator of the world’s largest derivatives exchange by trading volume, has received a ‘sell’ recommendation just as it gears up to launch the country’s biggest initial public offering.Dolat Capital Market Pvt., a local brokerage house, initiated coverage on India’s largest stock exchange with a bearish call, saying tighter regulations on the country’s equity derivatives market would crimp trading volumes and lead to a decline in its market share.
As such, the rich valuations that the stock currently commands leave little room for upside, it added.Analyst recommendations on unlisted companies are uncommon in India and globally, making the call stand out ahead of the listing of its shares on a rival bourse.
Indian rules don’t allow self-listing.
While the brokerage said it doesn’t dispute NSE’s long-term structural growth story, it believes current valuations fail to reflect the regulatory headwinds.Shares of NSE are down 3% over the previous 12 months, according to unlisted share-trading platform unlistedzone.com.
The stock exchange currently commands a market value of 5.2 trillion rupees.India’s derivatives market has undergone sweeping regulatory changes over the past two years to check excessive speculation in derivatives.
