Understanding the history of Indian stock market

Published on: Sat Mar 18 2023

Acknowledging the Indian stock market's history

The Indian stock exchange, also known as the Bombay Stock Exchange (BSE), has a long and illustrious/glittering history that dates back to the nineteenth century. The BSE is Asia's oldest stock exchange and one of the world's oldest. We will look at the history of the Indian stock market and how it has changed over time in this blog.

The Origins of the Indian Stock Market

The Indian stock market can be traced back to the mid-nineteenth century, when the East India Company ruled India. The first organised stock exchange in India, known as "The Native Share and Stock Brokers Association," was established in Bombay (now Mumbai) in 1850. The exchange had only 318 members and traded mostly cotton shares.

The exchange grew in popularity/prominence over time, and by 1864, it had been renamed "The Bombay Stock Exchange" (BSE). The BSE continued to grow, and by the early twentieth century, it had become one of the world's most important stock exchanges.

The Early Years of the BSE

Trading on the BSE was primarily/mainly in stocks of cotton mills, jute mills, and tea companies in its early years. Shares of banks, insurance companies, and shipping companies were also traded on the exchange. There were no rules or regulations governing trading practises, and the BSE was governed by a small committee of brokers.

The BSE was incorporated as a company and received official government recognition in 1923. In addition, the exchange established regulations and rules to govern trading practises.

The BSE in Independent India

Following India's independence in 1947, the BSE grew and expanded. The exchange began trading in stocks of a diverse range of companies from various industries. Many industries, including banks, insurance companies, and other critical sectors, were nationalised by the government in the 1950s. This had a significant impact on the BSE because the government now owned many of the companies whose shares were traded on the exchange.

Despite this setback, the BSE grew in size and significance. The BSE introduced/initiated a computerised trading system in 1986, which revolutionised the way the exchange traded. The new system facilitated faster and more efficient trading, as well as attracting new investors to the market.

The Rise of the National Stock Exchange (NSE)

The National Stock Exchange (NSE) was founded in 1994 to compete with the BSE. The NSE was India's first exchange to introduce electronic trading, and it quickly became popular among investors. The NSE also launched new financial products, such as index futures and options, which helped to expand/broadenthe market even further.

The NSE became a significant competitor to the BSE, surpassing it in terms of trading volume in 2000. The BSE responded by modernizing its trading system and launching its own financial products.

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