Retail investor participation in NSE surges ahead of IPO in Q1

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The unlisted shares of the National Stock Exchange (NSE) continued to attract robust interest from resident individual investors during the June quarter, propelled by rising anticipation surrounding a potential initial public offering (IPO). This strong retail appetite persisted despite a substantial rise in share prices in the grey market.

The number of retail investors holding NSE shares valued up to Rs 2 lakh surged more than fourfold to 1.46 lakh in Q1 FY25, up from 33,896 in the previous quarter. Conversely, the number of investors holding shares worth more than Rs 2 lakh saw a slight decline to 343 from 354 in the previous quarter, according to shareholding data available on the NSE website.

With this, the cumulative stake held by individuals with shareholdings above Rs 2 lakh rose to 11.81 percent, representing 29.24 crore shares, compared to 9.89 percent or 24.48 crore shares in the preceding quarter. Meanwhile, investors holding shares worth less than Rs 2 lakh witnessed a minor dip in overall ownership, with their stake decreasing to 9.52 percent (23.56 crore shares) from 9.84 percent (23.86 crore shares).

This surge in retail participation significantly expanded NSE’s overall investor base, which now exceeds 1.59 lakh shareholders—up sharply from 39,201 in the previous quarter—solidifying its status as one of India’s largest unlisted companies by shareholder count.

Driven by this strong demand, NSE’s share price in the unlisted market rallied by over 36 percent during the quarter, climbing from Rs 1,650 in early April to Rs 2,250 by the end of June, according to traders active in the space. Currently the stock trades at around Rs 2225 a share.

Despite heightened investor interest, NSE’s IPO remains delayed due to ongoing regulatory challenges. As reported by Moneycontrol, NSE has submitted a settlement proposal to the Securities and Exchange Board of India (SEBI) to resolve the longstanding co-location and related issues. The exchange has reportedly proposed a settlement amount of around Rs 1,400 crore, with a decision expected from SEBI by the end of August.

Foreign institutional investors (FIIs) reduced their stakes in NSE during the quarter, offloading shares worth around Rs 5,870 crore. As a result, overall FII ownership declined to 26.95 percent, down from 28 percent in the previous quarter.

Among the key sellers were MS Strategic Mauritius (Morgan Stanley), which liquidated over Rs 1,700 crore worth of shares, reducing its stake from 1.58 percent to 1.26 percent. Mahogany Ltd sold shares worth Rs 1,125 crore, reducing its holding to 3.73 per cent from 3.93 per cent.

Crown Capital offloaded Rs 562 crore in shares, lowering its stake to 2.2 percent from 2.3 percent. Other global investors such as TIMF Holdings and TA Asia Pacific Acquisitions also reduced their exposure, selling shares worth Rs 326 crore and Rs 225 crore, respectively.

Meanwhile, the stakes of major domestic institutional investors—including LIC, SBI, Radhakishan Damani, and government-backed insurers like GIC, New India Assurance, National Insurance Company, and Oriental Insurance—remained unchanged during the quarter.