History of Indian Stock Markets
During the last Christmas holidays, We visited Mumbai along with our family and friends. The group included people from different age group and different background. Many of the must see tourist spots in the city found their names in our list by default. But we agreed to disagree on one thing. “A Baniyan Tree”.
Yes, you heard it right, a Baniyan tree. A majestic tree in Mumbai has something to do with History of Indian Stock Markets. Most of the stock market freaks of our group wanted to visit the place and get a snap/Selfie. But forced to drop the idea as majority was in favor of visiting marine drive
This particular Baniyan tree witnessed the evaluation of stock market cult in India. Perhaps, under this tree, concept of share trading started evolving.
It all Started under a Baniyan Tree
Four Gujarati and a Parsi man used to meet under this Baniyan tree in front of Mumbai Town Hall during 1850’s. They used to informally trade in Cotton, but little they knew how their activities are going to transform lives of crores of people in future. .
As their group grew because of the famous “share mania”, they formed the association called “The Native Share and Stock Broker’s Association”. thus formed the first official stock exchange which was renamed as Bombay Stock Exchange (BSE) in 1875.
Many stock broking firms in Mumbai are still family run business. They are named after the heads of the family. For example, DS Prabhudas Broking company (Now after the joint venture with Merrill Lynch, it is well known as DSP-Merrill Lynch)
After changing the few building, a plot of land on which the current BSE building stands was acquired in 1928 and completely occupied in 1930. Indian Stock Markets have seen many turbulent and as well as golden times over the period of more than 150 years.
The First mass participation from the general public came when Mr.Dhirubhai Ambani came up with Reliance IPO in 1980. The Bombay Stock Exchange introduced the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. Today Sensex is synonymous with stock market in India.
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In 1991, Dr. Manmohan Singh as Finance Minister announced series of reforms which led to next surge in the retail participation in the bourses only to be disillusioned by Harshad Mehta Scam.
*Also Read: How Harshad Mehta rigged the stock market.
Evolution of SEBI and NSE
BSE was the numero uno among the stock exchanges of India until the Harshad Mehta Scam came out in public. In knee jerk reaction government set up the Security Exchange Board of India (SEBI) akin to of SEC of America.
It also showed keen interest in setting up electronic clearing system and thus the National Stock Exchange (NSE) was born. NSE brought exceptional transparency, efficiency and professionalism to the system. It introduced many path breaking instruments such as equity derivatives. Today NSE counts for major portion of the turnover of Indian stock exchanges.
The tree still stands at Horniman Circle Park near Flora Fountain. Hope we get chance to visit this “foundation” of Indian stock markets next time when we are in Mumbai.
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