Define Stock Market in India

Stock Market in India

The Indian securities market has become one of the most dynamic and efficient securities market in Asia today. The Indian market now conforms to international standards in terms of operating efficiency. In this context, it would be informative to understand the origin and growth of the Indian stock market.

During the latter half of the 19th century, shares of companies used to be floated in India occasionally. There were share brokers in Bombay who assisted in the floatation of shares of companies. A small group of stock brokers in Bombay joined together in 1875 to form an association called Native Share and Stockbrokers Association. The association drew up codes of conduct for brokerage business and mobilised private funds for investment in the corporate sector. It was this association which later became the Bombay Stock Exchange, which is the oldest stock exchange in Asia. This exchange is now known as The Stock Exchange, Mumbai, or BSE.

Ahmedabad was a major centre of cotton textile industry. After 1880, many new cotton textile mills were started in and around Ahmedabad. As new cotton textile enterprises were floated, the need for a stock exchange at Ahmedabad was strongly felt. Accordingly, in 1894, the brokers of Ahmedabad formed The Ahmedabad Share and Stockbrokers Association, which later became the Ahmedabad Stock Exchange, the second stock exchange of the country.

During the 1900s Kolkata became another major centre of share trading on account of the starting of several indigenous industrial enterprises. As a result, the third stock exchange of the country was started by the Kolkata stockbrokers at Kolkata in 1908. As industrial activity in the country gained momentum, existing enterprises in cotton textiles, woollen textiles, tea, sugar, paper, steel, engineering goods, etc. began to undertake expansion activities and new ventures were also floated. Yet another stock exchange was started in 1920 at Chennai. However, by 1923, it ceased to exist. Later, in 1937, the Madras Stock Exchange was revived as many new cotton textile mills and plantation companies were floated in South India. Three more stock exchanges were established before independence, at Indore in Madhya Pradesh in 1930, at Hyderabad in 1943 and at Delhi in 1947. Thus, at the time of independence, seven stock exchanges were functioning in the major cities of the country.

The number of stock exchanges virtually remained unchanged for nearly three decades from 1947 to 1977, except for the establishment of the Bangalore Stock Exchange in 1957. During the 1980s, however, many stock exchanges were established.

Some of them were:

Cochin Stock Exchange (1978)

Uttar Pradesh Stock Exchange (at Kanpur, 1982)

Pune Stock Exchange (1982)

Ludhiana Stock Exchange (1983)

Gauhati Stock Exchange (1984)

Kanara Stock Exchange (at Mangalore, 1985)

Magadh Stock Exchange (at Patna, 1986)

Jaipur Stock Exchange (1989)

Bhubaneswar Stock Exchange (1989)

Saurashtra Kutch Stock Exchange (at Rajkot, 1989)

Vadodara Stock Exchange (at Baroda, 1990).

Thus, from seven stock exchanges in 1947, the number of stock exchanges in the country increased to eighteen by 1990. Along with the increase in the number of stock exchanges, the number of listed companies and the capital of the listed companies has also grown, especially after 1985. Two more stock exchanges were set up at Coimbatore and Meerut during the 1990s, taking the total to twenty.