India@75: History of Actions in India

Starting in the 18th century, stock trading in India has come a long way

William Feather, an American publisher and author once said that “one of the funny things about the stock market is that every time one person buys, another person sells, and both think they’re smart.”

Shares, also known as equity, are a security that represents the ownership of a fraction of the issuing corporation.

Stock units are called “shares” that entitle the owner to a proportion of the corporation’s assets and profits equal to the number of shares he owns.

humble beginnings

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EEB building on Dalal Street

Stock trading in India dates back to the 18th century when the East India Company began trading in loan securities. Later in the 1830s, corporate shares began trading in Bombay with the Bank and Cotton presses.

Stock exchanges in India began informally in the 1850s, when 22 stockbrokers began trading in front of Bombay City Hall under a banyan tree.

The Companies Act was introduced in 1850, after which investors began to show interest in corporate securities. The concept of limited liability also appeared around this time.

The number of runners continued to grow constantly changing their locations to finally settle in 1874 at what is now called Dalal Street.

An informal group known as the Native Share and Stockbrokers Association was organized as the Bombay Stock Exchange (BSE) in 1875.

BSE is the oldest stock exchange in Asia and was the first to receive permanent recognition under the Securities Contracts Regulation Act, 1956.

A series of stock exchanges

In 1894, the BSE was followed by the Ahmedabad Stock Exchange, which focused on trading shares of textile mills.

Shares of jute plantations and mills began trading on the Calcutta Stock Exchange in 1908.

This was followed by the Madras Stock Exchange, established in 1920

Post-independence scenario

After independence, the BSE dominated the trading volume. However, the low level of transparency and unreliable clearing and settlement systems increased the need for a financial market regulator.

The Sensex or Sensitive Index was launched in 1986, followed by the BSE National Index in 1989.

In 1988, the Securities and Exchange Board of India (SEBI) came into existence as a non-statutory body, which was further given statutory status by passing the SEBI Act on 30 January 1992.

Securities and Exchange Board of India (SEBI) came into existence as a non-statutory body in 1988, which was given statutory status in 1992.

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Securities and Exchange Board of India (SEBI) came into existence as a non-statutory body in 1988, which was further given statutory status in 1992. (MINT_PRINT)

The National Stock Exchange (NSE) was born in 1994 to address the need for another stock exchange large enough to compete with the BSE and the need for transparency in the stock market.

NSE began operations in the wholesale debt market (WDM) segment in 1994, the equity segment in 1994 and the derivatives segment in 2000.

In 1995, the BSE moved to an electronic trading system from the open floor system.

In 2015, SEBI merged with the Forward Markets Commission (FMC) to strengthen commodity market regulation, facilitate domestic and foreign institutional participation and launch new products.

After the country’s independence, 23 stock exchanges were added apart from the BSE, but currently there are only five recognized stock exchanges apart from the BSE and the NSE:

– Calcutta Stock Exchange Ltd.

– Joke Stock Exchange Ltd

– Metropolitan Stock Exchange of India Ltd

– India International Exchange (India INX)

– NSE IFSC Ltd

Current State of Equity Trading in India

Today, people can trade online from the comfort of their homes.  Facilities like zero brokerage Demat with live updates available

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Today, people can trade online from the comfort of their homes. Facilities like zero brokerage Demat with live updates available

BSE is currently measured as the 11th largest stock exchange in the world, with a market capitalization likely to be around $1.7 trillion.

The NSE’s market capitalization is estimated to be over $1.65 trillion.

The flagship benchmark index for BSE is called Sensex and for NSE it is Nifty50.

The exchanges remain at parity in terms of share trading volumes. Today, people can trade online from the comfort of their homes. Facilities like zero brokerage Demat with live updates available.

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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!