History Of Stock Markets From Banyan Tree To Share Trading
Do you know a large banyan tree in Mumbai’s Town Hall neighbourhood provided shade for the trading floor when the Indian stock market first began in the late 18th century? A small group of people would gather here to conduct informal cotton trades. This was primarily because Mumbai was a bustling commercial port where important commodities were frequently exchanged.
The stock market may be a very unpredictable environment. There are days when the markets are doing well and paying investors back for their capital, but there are also days when investors have suffered significant losses. One needs to be ready for both outcomes while investing in the stock market.
A stock market crash occurs when there is an unexpectedly steep decline in the indices over one or more trading days. Even though the markets always bounce back, the effects of a loss like this can last for years on investor sentiment.
Although there will undoubtedly be crashes in the future, it is necessary to consider the long standing journey of the Indian stock market – fromBanyan tree to share trading.
It all started under a Banyan tree
In the 1850s, a group of five Gujarati men and a Parsi man used to gather in front of Mumbai Town Hall under this banyan tree. They used to engage in the informal cotton trade, but they had no idea how their actions would affect millions of people’s lives in the years to come.
They established “The Native Share and Stock Brokers Association” as their group expanded as a result of the infamous “share frenzy.” Consequently, the first legal stock market was created and given the name Bombay Stock Exchange (BSE) in 1875.
Also Read: Understand What is Market Capitalization?
Mumbai still has a large number of family-run stockbroking enterprises. They bear the names of the family patriarchs. After a few buildings were changed, a block of land was purchased in 1928 and fully occupied in 1930. This is where the current BSE building is located. Over more than 150 years, there have been numerous difficult moments in the Indian Stock Markets as well as prosperous ones.
When Mr Dirubhai Ambani launched the Reliance IPO in 1980, it marked the first time that the general public participated in large numbers. In 1986, the Bombay Stock Exchange developed the BSE Sensex, offering the BSE a way to gauge the exchange’s overall performance. Sensex and the Indian stock market are now interchangeable.
Modern history
In the years that followed independence, the BSE predominated the trade volume. The absence of transparency and the dependability of settlement and clearing systems, however, increased the necessity for a financial market operator in addition to other macro factors, and the SEBI was founded as a non-statutory organisation in 1988. It was made a statutory body in 1992.
The BSE first created the Sensex, now known as the Sensex, in 1986, using the years 1978 -1979 as the base year. The performance of the exchange as a whole is tracked by this standard stock index, which consists of 30 companies.
In 1996, its rival NSE introduced the CNX Nifty, now known as the Nifty 50, as its benchmark exchange. It consists of 50 stocks and serves as the exchange’s performance indicator. By introducing first-of-a-kind products and services, it defeated BSE in the area of electronic screen-based trading and derivatives.
Impact of Technology on Share Market
The extent of stock market manipulation began to rise. The more open approach led to a transformation of the ring trading system. As technology improved over time to make trading more accessible and practical, so did the stock market. A greater volume of stock trading is carried out each day thanks to advanced technology. BSE used to be where most transactions took place.
However, it was less transparent and had several issues with clearance. As a result, BSE begins to experience increased levels of fraud. The Security Exchange Board of India (SEBI) decided to create certain important financial regulators as a result.
Conclusion
The BSE is currently ranked as the eleventh largest stock exchange in the world, with a potential market worth of $1.7 trillion. Over $1.65 trillion is thought to be the market cap of the NSE.
In respect of share trading volumes, the exchanges remain equal. People can trade online these days while sitting in their houses. There are amenities like an open demat account online and live updates.
