Abstract:
Introduction:
th
The stock market in India dates back to the 18 century when the
securities of the East India Company were traded in Mumbai and
Kolkata. Stock broking was not very popular in those days and in
Mumbai, during 1840 and 1860, there were only half a dozen
brokers recognised by the banks and merchants. The securities
traded were mainly shares, debentures and bonds representing
titles to property or promises to pay issued on the condition of
transfer from one person to another.
The export proceeds in gold and silver served as fresh capital for a
number of new ventures. Many new companies were started in a
variety of fields such as banking, land reclamation, trading, cotton
cleaning, pressing, shipping and construction. Banks were following
a reckless lending policy during this period. The excessive
speculation coupled with the reckless lending policy resulted in a
stock market boom. Any scrip that was floated in the 1860s
commanded a very high premium. The steep rise in the share prices
attracted a lot of people to the stock market.
The boom and burst of the Indian economy had its impact on the
share brokers too. The number of brokers increased significantly
and it stood at 250 in 1865. This brought brokers in Mumbai
together to form the first formally organised stock exchange in the
country-The Bombay Stock Exchange. It was formed as a society
named Native Share and Stock Brokers Association, in 1875.
Subsequently, stock exchanges were set up at Ahmedabad, Kolkata
and Madras in 1894, 1905 and 1908 respectively.