Indian stock market gears up for leap: NSE CEO  

India’s stock market is gearing up for a leap thanks to an influx of retail investors seeking better returns and the lower barriers for small companies to join the market, said the South Asian country’s major stock exchange chief.

“Even companies and startups which do not get funding from venture capitalists end up listing directly sometimes,” Ashish Chauhan, managing director and chief executive of the National Stock Exchange of India (NSE), said in an interview with The Korea Economic Daily in Mumbai last week.

Of last year’s 242 initial public offerings on the NSE bourse, 182 cases, or 75%, were startups and small and mid-sized enterprises (SMEs).

Founded in 1992, the NSE has emerged as India’s largest IPO market this year, according to the NSE CEO, citing lower entry barriers and increasing retail investors as the main reasons for the country’s bullish stock and IPO markets.  

“We have been able to develop smaller investment bankers across India. We can take very small companies to the market with the full prospectus being made ... So, in a way, the cost of raising funds is very low for small companies,” said Chauhan.

“We raised $3 billion for Hyundai Motor Co. but there are also companies that have raised a million and a half dollars this year.”

The NSE comprises two markets – the main board for large companies and the small board for SMEs.

MOM-AND-POP INVESTORS TO PROP UP MARKET

Chauhan pictured a rosy outlook for India’s stock market as more retail investors are expected to join the equity market to more rapidly build wealth.

Mom-and-pop investors have sharply increased during the COVID-19 pandemic from 31.0 million in 2020 to 59.4 million in 2022. They topped 100 million in August.

“We will have probably 500 to 600 million accounts (or people) … over the next 20 to 25 years,” said Chauhan, expecting more retail investors to join the stock market driven by Indian Prime Minister Narendra Modi's aggressive economic expansion policy.

“They (retail investors) now want to invest in the stock market in addition to fixed deposits or gold or real estate. So it's also an increasing sign of prosperity.”

He invited more foreign companies with operations in India to go public on the Indian stock market as Hyundai Motor did.  

In India's largest initial public offering, Hyundai Motor India raised $3.3 billion and began stock trading on both the NSE and the BSE, formerly the Bombay Stock Exchange, on Oct. 22.

It became Hyundai Motor Group's first overseas entity to list on a foreign bourse.

“We have a lot of foreign-origin companies whose subsidiaries have been listed in India for very long, even before India became independent,” said Chauhan. “We don't differentiate between a company coming from abroad or from within as long as it meets all the criteria.”

Korean electronics giant LG Electronics Inc.'s Indian unit recently submitted an IPO application for a preliminary review to the Securities and Exchange Board of India.

The NSE is one of the country’s two primary stock exchanges alongside BSE founded in 1875.

Chauhan took the helm of the NSE in July 2022. Before joining the NSE, he led the BSE from 2012 to 2022.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Sookyung Seo edited this article.