History of Indian Stock Market

The Birth of the Share Market: The birth of the stock market dates back to 1602 in Europe. However, in India, the share market took root in 1840 under a banyan tree near Mumbai's townhall, where 22 individuals initiated this revolutionary concept. The credit for this establishment goes to four Gujarati and one Parsi share brokers.

Evolution into a Powerhouse: Over time, the number of brokers grew, and in 1875, they established the "Native Stock and Share Brokers Association," which is now known as the Bombay Stock Exchange (BSE). Today, the Indian share market stands tall among the world's largest stock exchanges.

Benchmark Indices and Exchanges: A stock exchange features a benchmark index, and in the case of BSE, it is known as the Sensex. BSE introduced the Sensex index in 1986, comprising the top 30 companies listed on the exchange.

In 1992, the National Stock Exchange (NSE) was founded, introducing electronic trading and revolutionizing the Indian stock market. NSE became the pioneer electronic exchange, listing almost all major companies in India and paving the way for online share trading and investments. NSE's benchmark index, known as the Nifty, includes the top 50 companies listed on the exchange and is often referred to as Nifty 50.

Understanding the Share Market: The term "share market" refers to a place where ownership shares are bought and sold. Just as you purchase goods from a store, you can acquire ownership shares of a company through the share market. The share market is an electronic marketplace where shares of listed companies on exchanges are traded through stockbrokers.

The Role of Stockbrokers: To participate in the share market, one requires the assistance of a registered stockbroker. A stockbroker is an individual or a company registered in the share market. When you open a demat and trading account, the stockbroker provides you with this facility. Your broker forwards your buy or sell orders to the stock exchange, for which they charge a fee known as "brokerage."

The Crucial Role of Brokers: Brokers act as intermediaries between buyers and sellers in the stock market. They match the orders and facilitate the transactions. Thus, brokers play a vital role in ensuring smooth operations and execution of trades in the market.

Understanding the Role of IPOs: When a company needs capital for business expansion, it has two options. It can either take a loan from a bank, which entails paying interest, or it can raise funds by offering shares to the public through an Initial Public Offering (IPO). By investing in an IPO, individuals become shareholders in the company, gaining ownership rights. This approach benefits both the company and investors.

The Regulator: Securities and Exchange Board of India (SEBI): SEBI, short for the Securities and Exchange Board of India, is the regulatory body that governs and controls the share market. It was established in April 1988 as a non-constitutional body and was granted statutory status in January 1992. SEBI consists of nine members, including a chairman appointed by the Government of India. Its primary objective is to safeguard the interests of investors and prevent fraudulent practices.

Conclusion: Today, we have explored various facets of the share market, from its inception to the role of stockbrokers and the regulatory authority, SEBI. If you aspire to venture into the share market, we strongly recommend conducting thorough research, seeking guidance from experienced individuals, and familiarizing yourself with SEBI's regulations and terms. We will continue to bring you informative blog post, so be sure to subscribe to our blog.

Note: This blog post has been created for illustrative purposes, and it is important to seek professional advice and conduct thorough research before making any investment decisions.