Mumbai, December 20, 2025 — The National Stock Exchange of India (NSE) is heading into the final stretch of 2025 with a paradox on its hands: benchmarks remain near record territory, but parts of the market are showing signs of fatigue. On the last trading day of the week, the Nifty 50 ended at 25,966.40, up 0.58%, while NSE’s screen also showed GIFT Nifty futures trading higher in early hours on Saturday. [1]
Against that backdrop, the exchange itself is implementing some of the biggest micro-structure tweaks India’s derivatives traders have seen in years—changes that could reshape liquidity, retail participation, and even how “opening prices” get discovered. And in the background, the long-delayed NSE IPO narrative is still alive, fueled by settlement moves and a shifting regulatory agenda.
Below is a fully up-to-date snapshot of what’s moving around the National Stock Exchange of India as of 20.12.2025—including the latest reforms, headline numbers, and where major institutions think the Nifty could land by end-2026.
Where the NSE market stands right now
NSE’s own market widget pegged India’s listed-market footprint at about ₹468.87 lakh crore (around $5.2 trillion) as of December 19. [2] That’s the giant stage on which the exchange’s most important “product” performs: price discovery.
But price discovery isn’t just about where the Nifty closes. It’s also about how it opens, who participates, and whether the market’s plumbing incentivizes stability or chaos.
That’s why the next two NSE changes matter more than they look at first glance.
NSE rolls out a derivatives “pre-open” session: cleaner opens, fewer surprises
In a significant market-structure shift, NSE has introduced a pre-open session for equity derivatives futures (both single-stock and index futures) using a call auction mechanism—a format designed to aggregate orders and determine an opening price based on supply and demand rather than a first-come-first-hit scramble. [3]
How the NSE derivatives pre-open works
According to NSE’s published framework:
- The pre-open runs 9:00 am to 9:15 am. [4]
- Order entry is 9:00–9:08 with a system-driven random closure between the 7th and 8th minute. [5]
- Order matching and trade confirmation follows 9:08–9:12, and then a buffer period runs 9:12–9:15 to transition into continuous trading. [6]
It’s also targeted (at least initially) toward current-month futures, expanding to next-month futures in the final five trading days before expiry. [7]
Why this matters for the National Stock Exchange of India
Pre-open sessions are basically the exchange saying: “Let’s not let the first few seconds decide the day’s tone.” For an ecosystem where index derivatives dominate trading intensity, the opening print can influence:
- intraday risk models and margins
- market-maker quotes
- algorithmic trading triggers
- retail “gap-up/gap-down” behavior
In plain English: NSE is trying to make the open less jumpy and more deliberate—which is exactly the kind of infrastructure upgrade you do when a market becomes large enough that opening volatility starts to look like a systemic feature, not a quirk.
NSE cuts index derivatives lot sizes: smaller contracts, wider participation
The second major change is more visible to everyday traders: NSE is reducing the market lot sizes on key index derivatives.
As reported by The Economic Times, NSE is set to reduce the Nifty 50 derivatives lot size from 75 to 65, with Bank Nifty moving 35 to 30, Nifty Financial Services (FINNIFTY) 65 to 60, and Nifty Midcap Select140 to 120. [8]
The same report notes the revision is effective from end of day December 30, 2025, applying to contracts expiring thereafter. [9]
What smaller lot sizes change in practice
A lot-size cut isn’t a “bullish” or “bearish” signal by itself. It’s an accessibility and risk-sizing change:
- Lower notional exposure per contract can make index derivatives more approachable for smaller traders.
- It can also change margin requirements, hedging efficiency, and position sizing for institutions and prop desks.
- Over time, it may influence the market’s balance between “many smaller positions” vs “fewer larger ones.”
In a market where regulators have been actively discussing the heat level in derivatives, smaller lots are a subtle but meaningful dial-turn: reduce friction for responsible participation, while improving contract value alignment.
SEBI-driven index reforms are also reshaping NSE’s flagship derivatives benchmarks
NSE’s derivatives ecosystem doesn’t live in isolation—its major indices are now part of a broader integrity conversation.
In October, Reuters reported that SEBI approved a phased restructuring of derivatives-linked banking indices, including NSE’s Nifty Bank, to make them more broad-based and reduce vulnerability to manipulation, with Nifty Bank restructuring targeted by March 2026. [10]
The underlying idea is simple: if an index is too narrow or too concentrated, it becomes easier for a large trader to push it around—especially when options and futures are massive relative to the cash market.
For NSE, which hosts some of the world’s busiest derivatives markets, that’s not an academic worry. It’s core market integrity plumbing.
NSE turnover slides to a two-year low: the liquidity warning light
While the exchange is upgrading mechanics, a different signal is flashing: cash-market turnover has softened sharply.
The Economic Times reported that in December so far, the average daily turnover of equity market trades on the NSE fell to ₹90,076 crore, the lowest since November 2023, versus ₹1,04,576 crore in November and ₹98,740 crore in October. [11]
The same report ties the slowdown to:
- uncertainty about returns in small- and mid-caps
- weaker “market breadth” (fewer stocks participating in the rally)
- reduced churn by retail traders and HNIs
- potential revenue pressure for brokerages when volumes sag [12]
This is the most important nuance to understand about NSE right now:
Index levels can look healthy while participation thins out underneath.
That can make the market more fragile—because fewer active participants can mean less shock absorption when volatility returns.
Retail participation is still booming: NSE trading accounts cross 24 crore
Here’s the twist: even with softer turnover, India’s investor base is still expanding.
Another Economic Times report says NSE crossed 24 crore unique trading accounts in November 2025, with unique registered investors at 12.2 crore as of October 2025. [13]
It also reported:
- individuals (direct equity + mutual funds) held 18.75% of NSE-listed companies as of Sept 30, 2025, a 22-year high [14]
- NSE’s Investor Protection Fund rose 19% YoY to ₹2,719 crore as of Oct 31, 2025 [15]
- NSE conducted 11,875 investor awareness programmes in the first half of FY26 alone [16]
So the story isn’t “retail left.” It’s more like:
Retail arrived… and then got pickier about where to trade.
That’s consistent with a market where mid/small-caps disappoint while benchmarks hold up—participation doesn’t vanish, it becomes more cautious.
NSE IPO: settlement momentum returns, but the clock is still ticking
The NSE IPO remains one of India’s longest-running financial cliffhangers. The exchange has wanted to list for years, but regulatory and legal overhangs have repeatedly slowed the timeline.
Reuters reported in November that NSE set aside nearly ₹13 billion to settle pending regulatory cases, filing settlement applications totaling ₹13.87 billion, a move widely seen as clearing the path toward a public listing. [17]
That report also noted:
- the cases trace back to a 2019 SEBI fine related to fair access issues
- NSE’s net profit fell 33% YoY (to ₹20.98 billion) amid lower volumes
- transaction charge revenue declined, and equity options premium volume dropped 16% QoQ [18]
The Economic Times similarly framed NSE’s settlement provision as a major step toward its long-awaited listing, citing the same profit decline context. [19]
Why the IPO story still matters to the market
NSE isn’t just another company. It’s the infrastructure. If it lists, it potentially changes:
- governance scrutiny (public-market standards)
- disclosure cadence
- how the market values the “exchange business model” in India
- competitive dynamics with other venues
Even without a confirmed date, the settlement moves keep the IPO in the “active file” rather than the “museum of abandoned plans.”
Regulation in motion: SEBI reforms and proposed new powers
The regulatory background is evolving fast—and that environment directly affects NSE members, products, surveillance, and compliance.
Reuters reported in mid-December that SEBI approved changes to mutual fund fee transparency and adjusted brokerage caps for equity cash transactions, alongside broader rule changes affecting brokers and new market practices. [20]
Separately, Reuters reported India tabled a bill proposing enhanced investigative powers for SEBI and conflict-of-interest disclosures, and giving the government authority to ban trading in certain securities and set rules around derivatives-eligible commodities. [21]
For NSE, this matters because the exchange sits at the intersection of:
- product design (what contracts exist)
- surveillance (what behavior gets flagged)
- enforcement support (how quickly issues are investigated)
When SEBI’s toolkit expands, exchange operations tend to become more compliance-intensive—and, ideally, more trusted.
Global footprint: Russia gets Nifty 50 exposure via Sberbank-linked product
NSE’s brand influence is also expanding beyond India, not only through offshore derivatives but also via index-linked investment products.
In a December 4 press release hosted on NSE archives, NSE said Sberbank and JSC First Asset Management introduced a mutual fund (“First–India”) linked to the Nifty 50 Index, providing Russian retail investors exposure to India’s equity benchmark. [22]
The release also states:
- Nifty 50 represents 50 large-cap, liquid stocks across 15 sectors
- there are 45+ passive funds in India and 22 passive funds outside India tracking Nifty 50
- Nifty 50 will complete 30 years on April 22, 2026 [23]
And it includes a notable brag sheet: NSE is the world’s largest derivatives exchange by trading volume (contracts) per FIA calendar year 2024 stats, and ranked 2nd globally in equity by number of trades per WFE 2024 stats. [24]
NSE Indices update: changes in Nifty fixed-income indices
Not all NSE-linked news is equity drama. On the index services side, NSE Indices announced changes to certain Nifty fixed income indices, effective December 23, 2025, including adding a Power Grid Corporation of India Ltd bond (with listed ISIN and maturity) to two indices. [25]
This is a quieter but important theme: India’s market ecosystem is steadily broadening the toolkit for fixed income benchmarking—an area with plenty of long-term growth potential as retail participation expands beyond equities.
Forecasts and analyst calls: where Nifty could be by end-2026
Because NSE is the home venue for Nifty-linked derivatives, forecasts for the Nifty are indirectly forecasts for derivatives demand, hedging intensity, and market sentiment.
Here’s what major institutions have been projecting for end-2026, as reported by Reuters:
- Goldman Sachs: upgraded India to “overweight,” targeting Nifty 50 at 29,000 by end-2026 [26]
- J.P. Morgan: sees Nifty reaching 30,000 by end-2026, with rate cuts and tax breaks as key drivers [27]
- Jefferies: targets 28,300 by end-2026, emphasizing earnings recovery and persistent domestic inflows [28]
- Reuters poll of economists: expects 28,500 by end-2026 [29]
Using NSE’s latest displayed Nifty close (25,966.40 on Dec 19), those targets imply roughly:
- 28,300: ~9.0% upside
- 28,500: ~9.8% upside
- 29,000: ~11.7% upside
- 30,000: ~15.5% upside [30]
The common thread in these outlooks is not “a mysterious rally from nowhere,” but a fairly specific story: policy tailwinds + earnings normalization + domestic flows acting as a stabilizer, even if foreign flows remain choppy. [31]
What to watch next on NSE India
As India enters the last two trading weeks of the year, NSE-linked catalysts cluster into three buckets:
- Micro-structure changes that alter trading behavior
- Liquidity and participation health
- Regulatory and corporate trajectory
NSE’s 2025 story is ultimately a tale as old as markets: the bigger the bazaar gets, the more it needs rules, rituals, and carefully designed openings so the crowd doesn’t accidentally set the building on fire. December’s reforms—pre-open auctions, smaller lots, and index integrity work—are all variations on that same theme: make the world’s busiest Indian trading venue more stable, more scalable, and harder to game.
References
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