Deven Choksey, the Managing Director of DRChoksey Finserv, recently shared his optimistic long-term outlook on National Stock Exchange of India Ltd (NSE) shares, describing them as a "deep value" investment and a "shock absorber" for portfolios during volatile market conditions.
Speaking to Business Today Television, Choksey outlined several key reasons for his conviction, emphasizing the unique characteristics of the exchange business and its potential for sustained growth in the Indian market.
Why NSE Stands Out as a Long-Term Investment
Choksey highlighted the inherent advantages of the exchange business model:
- Exclusivity: "The exchange business is exclusive. It's not a common business. Not everybody can come into the exchange business," Choksey stated, underscoring the high barriers to entry.
- Liquidity Benefits: Established exchanges like NSE benefit significantly from the sheer liquidity on their platforms. Once a product gains market share, this liquidity naturally attracts new investors and trading activity, creating a self-reinforcing cycle.
- Scope for New Products: The potential for introducing new financial products and services further diversifies revenue streams and enhances market appeal.
Beyond these structural advantages, Choksey pointed to NSE's robust financial health, noting its strong cash-generating capabilities and consistent dividend distribution as compelling reasons for its inclusion in model portfolios.
India's Market Growth and NSE's Role
Choksey articulated a vision for India's market capitalization, projecting a potential rise from $5 trillion to $15 trillion over the next 10 to 12 years. He believes the exchange business is uniquely positioned to benefit from this significant expansion.
He also highlighted the increasing trend of new listings, particularly from Small and Medium Enterprises (SMEs) and Micro, Small, and Medium Enterprises (MSMEs) seeking to raise capital from the public markets, which would directly contribute to NSE's transaction volumes and listing fees.
Currently, approximately 60-70 percent of NSE's revenue is derived from transaction income, with the remainder generated from diverse segments such as data services, index products, and listing fees.
Advice for Investors and Market Debut
For investors who may have missed out on an NSE IPO allotment, Choksey advised a disciplined, long-term approach. "They should do SIP [Systematic Investment Plan] and keep buying this stock in the portfolio. Keep a horizon of at least three to five years," he recommended, stressing the importance of patience and consistent accumulation.
The National Stock Exchange's shares were recently admitted for trading on the Metropolitan Stock Exchange of India (MSEI) under the 'Permitted-to-Trade' category. This move coincided with NSE's scheduled debut on BSE Ltd, following the completion of its substantial Rs 22,568.94-crore initial public offering.