History of the Indian Stock Market

Like most modern ideas, stock markets are a very powerful idea that has a unique and amazing history. If the reader is interested in this excellent history, then they are at the right place as this article is going to discuss the history of Indian stock market.

While the stock market of India has a rich and glorious history, one can try to summarise its history of nearly one and a half centuries in a few major developments and events. These include the following:

  • The first stock exchange in India was established way back in 1875 in Bombay, Maharashtra, called the ‘Bombay Stock Exchange’ (BSE), where the native share and stock broker’s association were formed to trade in securities. Bombay Stock Exchange (BSE) has the distinction of being Asia’s first stock exchange.
  • It was long before the times of the internet, computers, and even electricity the stockbrokers used a paper trade system wherein they would get records of the price and quantity of the stock at the very inception. The best matches were then made manually. That is how the stock market used to get quotes and sound over the assembly.
  • Ever since many other stock markets have been established all over the country.
  • At the time India gained its freedom on the midnight of August 15, 1947, the stock market too shifted into control of Indians.
  • An independent market, the stock markets gave the opportunity to new and rising entrepreneurs to raise capital from the market for starting new businesses, many of which have become a crucial part of India’s growth story.
  • Stock markets saw fresh avenues of growth as the country opened up under Prof. Manmohan Singh’s Liberalisation, Privatisation, and Globalisation (LPG) policy.
  • National Stock Exchange (NSE) was established a year later.
  • In 1992, the BSE Sensex rallied from 1000 to 4000, registering an astonishing rise of 300%. This was because of Mr. Harshad Mehta, whose unethical voluminous deals led to an inorganic increase in the Pisces. His scam could be discovered.
  • One of the consequences of the scam was the establishment of the SEBI (Securities Board of India). It was first introduced to regulate the undesired volatility in the stock market. SEBI (Securities Board of India) would be responsible for making the stock exchanges a much more secure place for smaller investors to invest without fearing being scammed by major players.
  • In 2002 and 2003, the settlement period got revised to up to 2 business days, and the BSE Sensex was shifted to a free-float market.
  • In 2004, as the Indian National Congress (INC) came back in power after the national elevation, the Sensex fell by 11.14%, which would be the biggest fall ever in its history. 
  • In 2004, the NSE also launched the EFT listings.
  • After another market fall in 2008, the Initial Public Offering (IPO) index was launched. The market time was changed from 9:00 AM to 3:30 PM.
  • Bombay Stock Exchange (BSE) achieved the landmark of the market capitalization of Rs 100 lakh crores in 2014, while the SME (Small and Medium-size enterprises) index crossed the Rs. 10 thousand crores mark.
  • In June 2021, there were seven crore registered users.

Over time, the stock market has fallen victim to many scams as well as has been home to many success stories. Its indexes have become the barometer of the Indian commercial class’ moods, and the rise and fall of those indexes have often been interpreted as an unconscious commentary on the political, social, economic, and financial developments of the country.

Its indexes have also been considered a barometer of investor moods as well as a way of measuring expected economic development.

The stock markets in India have regularly paid a higher return over an extended period of time than any other safe investment like fixed deposits. The very nature of securities, the risk involved, and the increasing demand for Indian securities are the reason for the same. Moreover, the country has witnessed a lot of foreign direct investment (FDI), which has taken the stock market prices to new highs frequently.

In the past three decades, the legal framework has made stock exchanges more secure, while the advent of internet-based technologies has made trading increasingly safer. Stock markets have continued to grow as well as the securities traded have continued to give an excellent return on the investment if considered over a given span of time.

The Bottom Line

As the article is wrapped up, one can conclude that the history of the Indian stock market is deep and enriching, and if its past has been glorious, its future is going to be even more glorious as it grows to be one of the most popular stock markets of the world and is likely to attract investment both from overseas as well as from domestic players.

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