history of Indian stock market. BSE, NSE.

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Before 1960

Indian stock market marks to be one of the oldest stock market in Asia. It dates 

back to the close of 18th century when the East India Company used to 

transact loan securities. In the 1830s, trading on corporate stocks and shares 

in Bank and Cotton presses took place in Bombay. Though the trading was 

broad but the brokers were hardly half dozen during 1840 and 1850.

An informal group of 22 stockbrokers began trading under a banyan tree 

opposite the Town Hall of Bombay from the mid-1850s, each investing a 

(then) princely amount of Rupee 1. This banyan tree still stands in the 

Horniman Circle Park, Mumbai. In 1860, the exchange flourished with 60 

brokers. In fact the 'Share Mania' in India began with the American Civil 

War broke and the cotton supply from the US to Europe stopped. Further 

the brokers increased to 250. The informal group of stockbrokers organized 

themselves as the The Native Share and Stockbrokers Association which, in 

1875, was formally organized as the Bombay Stock Exchange (BSE). 

BSE  Bombay Stock Exchange.

 

      Established in 1875. 

BSE was shifted to an old building near the Town Hall. In 1928, the plot of land 

on which the BSE building now stands (at the intersection of Dalal Street, 

Bombay Samachar Marg and Hammam Street in downtown Mumbai) was 

acquired, and a building was constructed and occupied in 1930. 

Premchand Roychand was a leading stockbroker of that time, and he assisted in 

setting out traditions, conventions, and procedures for the trading of stocks

at Bombay Stock Exchange and they are still being followed. Several stock 

broking firms in Mumbai were family run enterprises, and were named after 

the heads of the family. 

The following is the list of some of the initial members of the exchange, and 

who are still running their respective business: 

• D.S. Prabhudas & Company (now known as DSP, and a joint venture partner 

with Merrill Lynch) 

• Jamnadas Morarjee (now known as JM) 

• Champaklal Devidas (now called Cifco Finance) 

• Brijmohan Laxminarayan 

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. The most decisive period in the history of the BSE took 

place after 1992. 

In the aftermath of a major scandal with market manipulation involving a BSE 

member named Harshad Mehta, BSE responded to calls for reform with 

intransigence. The foot-dragging by the BSE helped radicalise the position 

of the government, which encouraged the creation of the National Stock 

Exchange (NSE), which created an electronic marketplace. 

 

NSE National Stock Exchange

Established in in 1994

NSE started trading on 4 November 1994. Within less than a year, NSE 

turnover exceeded the BSE. BSE rapidly automated, but it never caught up 

with NSE spot market turnover. The second strategic failure at BSE came in 

the following two years. NSE embarked on the launch of equity derivatives 

trading. BSE responded by political effort, with a friendly SEBI chairman 

(D. R. Mehta) aimed at blocking equity derivatives trading. The BSE and D. 

R. Mehta succeeded in delaying the onset of equity derivatives trading by 

roughly five years. But this trading, and the accompanying shift of the spot 

market to rolling settlement, did come along in 2000 and 2001 - helped by 

another major scandal at BSE involving the then President Mr. Anand 

Rathi. NSE scored nearly 100% market share in the runaway success of 

equity derivatives trading, thus consigning BSE into clearly second place. 

Today, NSE has roughly 66% of equity spot turnover and roughly 100% of 

equity derivatives turnover.

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