The Indian stock market has a rich history dating back to the early 19th century. Over the years; it has evolved to become one of the most dynamic and vibrant stock markets in the world. Here are some interesting facts about the Indian stock market that you might not know.
Oldest stock exchange in Asia
The Bombay Stock Exchange (BSE) is the oldest stock exchange in Asia and the first one to be established in India. It was founded in 1875 and is also one of the ‘oldest stock exchanges’ in the world. The BSE was started as a small group of brokers who used to meet under a banyan tree to trade stocks. Today, it has grown into one of the largest stock exchanges in the world with a market capitalization of over $2 trillion.
Largest number of listed companies
The Indian stock market has the largest number of listed companies in the world. As of December 2021; there were over 6,500 companies listed on the BSE and the National Stock Exchange (NSE) combined. This is more than the number of companies listed on any other stock exchange in the world.
Two major stock exchanges
In India, there are two major stock exchanges- BSE and NSE. The BSE is the older exchange, while the NSE was established in 1992. The NSE is a fully automated electronic exchange, while the BSE is a hybrid exchange that uses both electronic and traditional open-outcry trading.
Rise of online trading
Online trading has become very popular in India in recent years. Most brokers now offer online trading platforms that allow investors/traders to trade stocks from the comfort of their homes. This has made investing in the stock market more accessible to the general public.
Large retail investor base
India has a large retail investor base. According to the National Stock Exchange, retail investors account for over 50% of the trading volume on the exchange. This is in contrast to other countries where institutional investors dominate the stock market.
Unique trading session
The Indian stock market has a unique trading session called the "Muhurat trading" session, which is conducted on Diwali, the festival of lights. It is considered auspicious to do trading on this day, and the exchange conducts a one-hour special trading session in the evening.
The Indian stock market is dominated by a few large companies. The top ten companies in terms of market capitalization account for over 50% of the total market capitalization of the BSE and NSE combined. These companies are often referred to as index heavyweights and include Reliance Industries, Tata Consultancy Services, HDFC Bank, Infosys, and Housing Development Finance Corporation.
High frequency trading
High-frequency trading (HFT) has gained popularity in the Indian stock market in recent years. HFT refers to the use of advanced computer algorithms to execute trades at high speeds. This type of trading now accounts for a significant portion of the trading volume in the Indian stock market.
The ‘Securities and Exchange Board of India’ (SEBI) is the market regulator for the Indian stock market. It was established in 1992 and is responsible for regulating the securities market in India. SEBI's main functions include protecting the interests of investors, promoting the development of the securities market, and regulating the activities of market participants.
India's economic growth
The Indian stock market is closely tied to the country's economic growth. Over the past decade- India has emerged as one of the fastest-growing major economies in the world. This has helped to drive the growth of the Indian stock market, as investors have become increasingly optimistic about the country's long-term prospects.
In conclusion, the Indian stock market has come a long way since its humble beginnings in the ‘19th century’. Today, it is a vibrant and dynamic market that is home to thousands of listed companies and millions of investors. The market has also evolved to embrace new technologies such as online trading and high-frequency trading, which have made it more accessible and efficient.
Despite the challenges posed by the COVID-19 pandemic, the Indian stock market has continued to perform well in recent years, reflecting the country's strong economic growth and increasing investor confidence. With the ongoing digital transformation of the Indian economy, we can expect to see further growth and innovation in the Indian stock market in the years to come.
As with any investment, it's important to do your own research and consult with a financial advisor before investing in the Indian stock market. However; if you're interested in investing in one of the most exciting and dynamic markets in the world, the Indian stock market is definitely worth considering.