New Delhi, Sept. 9 -- National Stock Exchange of India Ltd. has lowered the price range for its long-awaited IPO and may shrink the stake on sale, according to people familiar with the matter, leaving the deal poised to fall short of becoming India's biggest-ever listing.

NSE is likely to set its IPO price at Rs.1,700-1,785 per share, below an earlier marketed range of Rs.2,000-2,100, the people said, asking not to be identified because the information is private. It may also reduce the stake being offered to about 5.5% of the total equity capital from the originally planned 6%, after some shareholders backed out of selling their stakes at the lower price, they said.

At the top of the proposed range, the sale of a 5.5% stake would raise...