Step 1: Think of what NSD does.
NSD is an institute that teaches theatre. A place that teaches a subject is called a school, so 'School' must be the middle word.
Step 2: Recall the name.
Its official name is the National School of Drama, founded in Delhi in 1959 and now an autonomous body under the Government of India.
Step 3: Compare with the options.
Stage, Society and Studio do not appear in the official name. Only option 2 uses the word School.
Final Answer:
The answer is option (2), National School of Drama.