NSE’s index-options grip is slipping. Where will its next growth come from?

The National Stock Exchange’s dominance of India’s capital markets remains largely intact. But the exchange is facing a more interesting question after its recent listing: how does it sustain growth as its grip on the lucrative index-options market weakens?

Two brokerages that initiated coverage on NSE this week remain bullish on the exchange, pointing to its near-dominance in cash equities and futures, strong liquidity and technology infrastructure. At the same time, both Macquarie and PL Capital have flagged the decline in NSE’s index-options market share and regulatory changes affecting trading volumes.

The answer, according to the two reports, could increasingly lie outside transaction charges—in data, colocation, index licensing, listings, connectivity and newer products.

Macquarie initiated coverage with an ‘Outperform’ rating and described NSE as “The Dominator”, while PL Capital initiated coverage with an ‘Accumulate’ rating and called it the “Goliath of Capital Markets.”

NSE still dominates where it matters

NSE’s core market position remains formidable. Macquarie puts its FY26 market share at 93% in cash equities and 99.8% in equity futures. Its share in equity-options premium turnover stood at 74.7%.

PL Capital has a similar assessment, saying NSE has more than 93% share in cash markets and nearly 100% in stock and index futures in YTD FY27.

“NSE dominates the exchange landscape with over ~93% share in cash market and ~100% in stock and index futures,” PL Capital said, citing strong liquidity, technology and its comprehensive product suite.

Macquarie said NSE’s “liquidity, technology infrastructure and integrated product suite reinforce its scale and market position.”

But index options are becoming a problem

The pressure is most visible in index options.

PL Capital said NSE’s index-options market share has fallen from around 97% in FY24 to 72% in FY26 and 65% in YTD FY27. Regulatory changes, including curbs on weekly expiries, the Closing Auction Session (CAS) and proprietary-trading rules, have also affected volumes.

“Market share erosion in the lucrative index options continues to be a drag,” PL Capital said.

The issue matters because NSE remains heavily dependent on transaction income. Transaction charges accounted for around 79% of operating revenue in FY26, with stock and index options alone contributing about 60% of operating revenue, according to PL Capital.

Macquarie similarly noted that options premiums generated around 60% of NSE’s revenue in FY26.

The next growth engine: everything beyond trading

This is where the two brokerages see substantial opportunity.

Macquarie expects NSE’s revenue to grow at a 12% CAGR over FY26-30, driven by non-transaction revenues and new products, even as it factors in modest share losses in cash equities and F&O.

“NSE is India’s dominant market infrastructure asset, combining unrivalled liquidity, scale and network effects,” Macquarie said.

The brokerage expects NSE to evolve from being predominantly an exchange into a “multi-product financial infrastructure platform” spanning derivatives, power markets, mutual funds, bonds, market data, connectivity and international financial services.

Macquarie forecasts NSE’s non-transaction revenue to grow at 13% annually through FY30, while the broader Indian exchange industry’s non-transaction revenue is expected to grow at 15%. It said these businesses could improve revenue visibility and reduce dependence on trading cycles.

PL Capital is also counting on this diversification. It expects listing services, colocation, data feeds and index licensing to grow at around 14% annually through FY29, compared with 9% growth in transaction income.

CAS is the near-term hurdle

The transition, however, will not happen without some pressure on the core business.

Macquarie said industry data indicates that CAS is weighing on trading activity as investors adjust to the new framework. It expects near-term pressure on cash-equity, derivatives and margin-trading volumes.

PL Capital also identified lower volumes due to CAS as a risk, while noting that NSE has navigated multiple regulatory changes in the past.

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