History of Stock Exchange in India

What is Stock Exchange?

The stock exchange is defined as market or place where shares, stocks and other long-term investments are bought and sold. It is simply a body of individuals that is either incorporated or not, and is established mainly for regulating business activities concerned with purchasing, selling or dealing in securities. Stock market provide ideal platform to investors for trading securities as they get access to multiple securities for building their strong portfolio. It also assures them of healthy environment in investment market because all price of securities is evaluated properly prior to their listing.

History of stock exchanges in India dates back to year 1800 when trading floor was set up under shade of banyan tree opposite to Mumbai Town Hall. Here, peoples use to meet for informally trading in cotton and this was mainly due to Mumbai being key trading port where all essential commodities were traded. The “Native Share and Stock Broker’s Association’’ was the first association where share trading takes place in India. Later on, it was renamed to Bombay Stock exchange that is also know as BSE. The first trading association began functioning with around 318 members. At present, there are 24 stock exchanges in India situated in distinct parts of country. National Stock exchange (NSE) and Bombay Stock exchange (BSE) are two major and important stock exchanges operating in country at present.

Stages of Stock exchange in India

The Indian stock exchange has originated in 18th century and has developed since then in distinct stages which are mentioned below: – 

  1. 1800-1865: Initially, East India company floated shares via small group of brokers. There were just half dozen brokers in period between 1840-50 but this number rose to 60 brokers in year 1850. Now, in 1860, the concept of shares attracted the entire market that lasted till year 1865.
  1. 1866-1900: This period is marked by sudden change in stock market leading to establishment of regular and organized market for securities. Bombay market was on top and become properly organized stock exchange in India. A group of brokers also formed a code of conduct during this period for regulating activities and avoiding any misconduct in trading market.
  2. 1901-1913: With the growth in political field, the investment of shares also grew during this period in fast pace. The swadeshi movement led by Mahatma Gandhi results in development of industrial enterprises. Calcutta also become a major trading centre at that time. There was floating of new ventures and another major stock exchange was established around 1920 in Madras.
  3. 1935-1965- During this period, the planning of industrial development took place. There were two more stock exchanges that got established: one at Delhi and another at Hyderabad. In addition to it, after independence between period 1946-1990, 12 more stock exchanges were set up across the country.

Today, the Bombay Stock Exchange is ranked as 11th world’s largest stock exchange having market capitalization value of around $1.7 trillion. Market capitalization of National Stock Exchange is valued at above $1.65 trillion. There are around 5,000 companies listed on BSE and 1,500 on NSE. Whereas when comparing both of these major stock exchanges in terms of share trading volumes, they stands equal.