history of indian stock market

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History of Indian Stock Market

Indian Stock Market is one of the oldest Stock Market in Asia. East India Company used to transact

Loan Securities by the end of 18thCentury. In the 1830s, trading on corporate stocks and shares in Bank

and Cotton presses took place in Bombay.

Establishment of BSE (Bombay Stock Exchange)

Few informal groups of Stock Brokers organized themselves in 1875 and

were formally organized as Bombay Stock Exchange (BSE). In 1956, the

Government of India recognized the Bombay Stock Exchange as the

first Stock Exchange in the country under the Securities Contracts(Regulation) Act.

But still there was no means to measure the overall performance of the

exchange. So, in 1986, Bombay Stock Exchange developed BSE Sensex (Sensex = Sensitive Index),

an index of top 30 companies, which gave a means to measure the overall performance of the Exchange.

Establishment of SEBI (Securities and Exchange Board of India)

Until late 1980s, BSE ran with low transparency and an unreliable

clearing and settlement systems. Towards the end of the 1980s, neweconomic forces, the economic growth and currency crisis emphasized

the need for modernization of the financial system. Government created

the Securities and Exchange Board of India (SEBI)in 1988.
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Establishment of NSE (National Stock Exchange)

In April 1992, Bombay Stock Exchange crashed due to Harshad Mehta

Scam. Finance minister Mr. Manmohan Singh urged the need of other

Stock Exchange in competition to BSE. He tapped the Industrial

Development Bank (IDB) to take the lead of the project of creating

competition for BSE.

In November 1992, NSE (National Stock Exchange)was established as the first electronically traded

Stock Exchange in India. After a few years of operations, the NSE has become the largest stock

exchange in India.

BSE also automated the systems in 1995 but it never caught up with NSE Spot Market turnover.

Three segments of the NSE trading platform were established one after another. The Wholesale Debt

Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened

at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE

takes the 14th position in the top 40 futures exchanges in the world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty. CNX Nifty (Nifty = National

Fifty)is a diversified index of 50 stocks from 25 different economy sectors.

In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India

that started trading stock on the Internet in 2000. Today, NSE has roughly 66% of equity spot turnover

and roughly 100% of equity derivatives turnover.

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history of indian stock market

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