National Stock Exchange of India

The National Stock Exchange of India (NSE), established in 1992, is India’s leading stock exchange and one of the world’s largest by market capitalization. As of mid-2025, the NSE’s market cap stood at about $5.3 trillion.

The Securities and Exchange Board of India (SEBI), which oversees the NSE, recognized it as a stock exchange in 1993. Headquartered in Mumbai, it began operations in 1994.

In 1995, the NSE launched a fully automated electronic trading system, making it easier for investors to buy and sell stocks electronically. By 1999, it had fully phased out manual trading and became the first Indian exchange to do so.

The NSE is owned by a group of financial institutions, banks, and companies, including foreign investors, with more than 100,000 shareholders. The Life Insurance Corporation (LIC), the New India Assurance Company, and the State Bank of India (SBI) are among its major shareholders.

Why the NSE was formed

Before the NSE was established, India had numerous stock exchanges operating with minimal regulation. Brokers, particularly those at the Bombay Stock Exchange (BSE), held significant influence, and in the absence of proper administrative authority, malpractice became common.

To address these issues, the Ministry of Finance formed a committee in 1991 led by Manohar Pherwani, then chair of the Unit Trust of India. Known as the Pherwani Committee, it recommended creating a national exchange to bring order to the system.

The push to modernize and regulate India’s stock markets gained momentum in 1992, when a financial scandal involving stockbroker Harshad Mehta exposed systemic vulnerabilities. Mehta used fake bank receipts to obtain unsecured loans from banks and funneled those funds into the stock market, artificially inflating share prices. Once the scheme was uncovered, the market crashed, and public sector banks—including the State Bank of India—suffered heavy losses.

Under the leadership of its first managing director, R.H. Patil, the NSE introduced a fully electronic system that automatically matched buy and sell orders. It used satellite technology to connect trading computers across the country, making participation possible from nearly anywhere in India.

Patil also simplified the process of becoming a stockbroker, making it more accessible. To promote better governance, the NSE ensured that trading, ownership, and management were handled by separate groups.

Trading on the NSE

The NSE handles trading in equities, derivatives, debt instruments, mutual funds, exchange-traded funds (ETFs), and more. All trading is conducted electronically through the National Exchange for Automated Trading (NEAT) system, which allows investors across the country to participate from remote locations.

The exchange operates Monday through Friday from 9:15 a.m. to 3:30 p.m. Indian Standard Time, with a 15-minute preopening session from 9 to 9:15 a.m. used to calculate the opening price for each stock based on early buy and sell orders. Special trading sessions may be held on select occasions, such as Muhurat trading during the festival of Diwali. The exchange may also announce other limited sessions for technical or regulatory reasons.

Nifty 50 and other indexes

As of 2025, the NSE managed more than 400 stock market indexes, with about 2,700 companies listed on the exchange. The Nifty 50 is its best-known index. It comprises India’s 50 largest companies by market capitalization, drawn from key sectors, and includes actively traded stocks such as ICICI Bank, State Bank of India, Tata Steel, and Reliance Industries.

Other indexes are organized by category, including industry-specific indexes (such as Nifty Auto and Nifty Bank) and fixed income indexes (such as Nifty 8–13 Year Government Securities, which tracks Indian government bonds with maturities from 8 to 13 years).

The NSE co-location case

In what became known as the co-location case, a whistleblower in 2015 alleged that the NSE gave certain brokers unfair trading advantages by allowing faster access to market data through co-location. Introduced in 2009, this service let traders place their servers inside the exchange’s data center for a fee—reducing the time it took to receive data and execute trades.

The allegations led to investigations by SEBI, the Central Bureau of Investigation (CBI), and the Income Tax Department. Several former NSE officials, including ex-CEOs Chitra Ramkrishna and Ravi Narain, were named in the case. During the investigation, it emerged that Ramkrishna had shared confidential exchange information with an unidentified figure described in regulatory documents as a “Himalayan yogi.”

In September 2024, SEBI dropped the charges against the NSE and the individuals involved.

The case also stalled the NSE’s long-planned public listing. Although the ₹11 billion ($131 million) fine was still pending before India’s Supreme Court as of mid-2025, the exchange resumed steps toward an initial public offering (IPO) after the most serious charges were dropped.

NSE applied for a no-objection certificate and submitted a settlement proposal to SEBI. According to the regulator’s chair, no hurdles remain apart from finalizing the settlement. If it’s approved, SEBI and the exchange are expected to approach the Supreme Court together to withdraw the case, clearing the way for the IPO to move forward.