What is the Share Market? What is the history of the Indian Share Market?

A stock exchange is “a body of individuals, whether incorporated or not, constituted to regulate or control the business of buying, selling or dealing in securities.”

“Securities refers to shares, bonds, scrip, stocks, debentures stock, and other marketable securities of incorporated companies or similar, government securities, and rights or interest in securities.”

In India, the share market is a term used to refer to the two major stock exchanges in the country— the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). There are also 22 regional stock exchanges.

History of the Indian Share Market

  • The Indian stock market traces its history back to the late 18th century when the trading floor was under the shade of a sprawling banyan tree opposite the Town Hall in Mumbai. A few people would meet under this tree to informally trade in cotton.

  •  This was because Mumbai was a busy trading port, and essential commodities were traded here often.

  • The Companies Act was introduced in 1850, following which investors started showing an interest in corporate securities. The concept of limited liability also put an appearance around this time.

  • By 1875, an organization is known as ‘The Native Share and Stock Brokers Association’ came into being. This was the predecessor of the BSE.

  • In 1894, the Ahmedabad Stock Exchange came primarily to enable dealing in the shares of textile mills in the city.

  • The Calcutta Stock Exchange was formed in 1908 to facilitate a market for shares of plantations and jute mills.

  • It was in 1920 that the Madras Stock Exchange took shape.

  • In 1957, the BSE was the first stock exchange to be recognized by the Government of India under the Securities Contracts Regulation Act.

  • The SENSEX was launched in 1986, followed by the BSE National Index in 1989.

  • The Securities and Exchange Board of India (SEBI) was constituted in 1988 to monitor and regulate the securities industry and stock exchanges. In 1992 it became an autonomous body with completely independent powers.

  • In 1992, the NSE was formed as the first demutualized electronic exchange to ensure market transparency.

  • NSE began operations in the Wholesale Debt Market (WDM) segment in 1994, the equities segment in 1994, and the derivatives segment in 2000.

  • In 1995, the BSE switched to an electronic trading system from the open-floor system.

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

Current Day of the State Of Affairs:

Today, the BSE is measured as the world’s 11th largest stock exchange, and the market capitalization is likely to be around $1.7 trillion. The market capitalization of the NSE is estimated to be over $1.65 trillion.

The exchanges are still on parity in terms of share trading volumes. Nowadays, people can conduct online trading sitting in their homes. Facilities such as zero brokerage Demat and live updates are available.

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