The History of the Share Market in India

In the 1850s, Mumbai (then Bombay) was a booming hub for the cotton trade. Five Gujarati and Parsi stockbrokers started gathering under a massive Banyan tree sitting in front of the Town Hall. They didn't have computers or digital screens. They simply shouted out prices and physically exchanged paper certificates to buy and sell tiny shares of massive cotton mills. As the crowd grew to hundreds of people, they had to constantly change streets to find enough space.

Finally, in 1875, these brokers officially organized themselves into an association and bought a permanent physical building on a street in Mumbai. They named that specific street Dalal Street (Broker's Street). This became the legendary Bombay Stock Exchange (BSE). It is officially the oldest stock exchange in the entire continent of Asia.

For over 100 years, the BSE had an absolute monopoly. But it was highly corrupt, secretive, and manipulated by powerful brokers (the 'Ring'). In 1992, the legendary Harshad Mehta Scam exposed massive loopholes in the paper-based BSE system. To instantly clean up the corruption, the Indian Government launched a brand-new, massive, fully computerized competitor in 1994: The National Stock Exchange (NSE). Because the NSE was fully digital, transparent, and fast, it completely revolutionized the market, eventually becoming the largest derivatives exchange in the world.