Part 4 -Facts, History The Evolution of Indian and Global Stock Markets
Facts, History & Timelines: The Evolution of Indian & Global Stock Markets
Part 4 -Facts, History The Evolution of Indian and Global Stock Markets
The Indian stock market’s evolution reflects its economic growth, regulatory reforms, and global influences, while the world stock market’s history highlights the development of modern financial systems
The Evolution of Stock Markets: A Journey Through India and the World
Timeline of Indian and World Stock Market History
13th–15th Century:
Early Roots of Stock Markets (Global)
Global: In medieval Europe, particularly in Venetian states, merchants trade goods and bonds, laying the groundwork for financial markets. Antwerp (modern-day Belgium) emerges as a trade hub in the late 1400s, with early bond trading.
India: No formalized stock market exists; trade revolves around commodities like spices and textiles under regional empires.
1602–1700s:
Birth of Modern Stock Markets (Global)
Global (1602): The Amsterdam Stock Exchange, established by the Dutch East India Company, becomes the first formal stock exchange, trading company shares and bonds. This introduces concepts like public shareholding and dividends.
1602 – Birth of Modern Stock Market
The first formal stock exchange in the world was born in Amsterdam when the Dutch East India Company issued shares to the public.
This was the world’s first Initial Public Offering (IPO).
Global (1720):
Stock market bubbles emerge, with investors blindly buying shares, leading to crashes like the South Sea Bubble in London.
Global (1773):
The London Stock Exchange forms from informal coffeehouse trading, growing into a major international exchange.
India: No organized stock market yet; trade is informal, centered on commodities and early banking systems.
1700s–1830s:
Early Indian Trading and Global Expansion
India (1700s): The East India Company trades loan securities in India, marking the earliest form of securities trading. Corporate shares, mainly of banks and cotton presses, begin trading in Bombay (Mumbai) in the 1830s.
Global (1792):
The New York Stock Exchange (NYSE) is founded under the Buttonwood Agreement, formalizing trading in the U.S., initially focusing on government bonds and bank stocks.
24 stockbrokers signed the Buttonwood Agreement under a tree on Wall Street.
This laid the foundation for the NYSE — now the world’s most iconic exchange.
Global: Industrial Revolution fuels stock market growth in Western nations, with railroads and industrial companies driving expansion.
1850s–1875:
Formalization of Indian Stock Market
India (1850s): Informal stock trading begins in Mumbai under a banyan tree near Horniman Circle, involving 22 brokers. This evolves into Dalal Street by 1874.
India (1875):
The Native Share and Stock Brokers’ Association forms, becoming the Bombay Stock Exchange (BSE), Asia’s first stock exchange. It formalizes securities trading, driven by railway expansion, cotton mills, and opium/textile trade.
Global:
Stock exchanges proliferate in Europe and the U.S., with the NYSE growing as a global leader.
1914–1945:
World Wars and Indian Industrial Growth
Global (1914–1918):
World War I disrupts global markets, with increased government bond trading but economic volatility.
1971 – Rise of Electronic Trading
NASDAQ was launched as the first fully electronic exchange. It later became the home of tech giants like Apple, Microsoft, and Amazon.
1987 – Black Monday
Markets around the world crashed together. The Dow Jones plunged 22.6% in a single day — the worst in its history.
This event exposed vulnerabilities in computer-based trading systems.
Global (1929):
The Wall Street Crash triggers the Great Depression, causing global market declines and regulatory reforms like the U.S. Securities Act of 1933.
2008 – Global Financial Crisis
A collapse triggered by U.S. mortgage lending and the fall of Lehman Brothers shook the world. Trillions were wiped out as fear spread across continents.
2020 – COVID-19 Market Crash
Markets crashed globally in March 2020, but rebounded just as fast. Massive liquidity and retail participation marked this era.
India (1930s–1940s):
India:
1830s–1840s – Trading Under a Banyan Tree
In colonial Bombay, traders informally gathered under a banyan tree near Town Hall to trade cotton and shares. This was the unstructured birth of equity trading in India.
1875 – Bombay Stock Exchange (BSE)
The Native Share and Stock Brokers' Association was formed.
It later became the Bombay Stock Exchange (BSE) — the oldest stock exchange in Asia.
World War I impacts trade, but the BSE grows with new exchanges in Ahmedabad and Calcutta (Kolkata).
Recovery occurs with growth in textiles, jute, and tea industries.
World War II (1939–1945) boosts demand for war-related goods, aiding market growth despite trade disruptions.
New industries like steel and cement emerge.
India (1956):
The Securities Contracts Regulation Act formalizes stock trading, enhancing market structure.
1957 – BSE Gets Legal Recognition
BSE was officially recognized by the Indian government under the Securities Contracts (Regulation) Act.
1964–1980s:
Indian Market Expansion and Global Benchmarks
India (1964):
The Unit Trust of India (UTI) launches the US-64 mutual fund scheme, raising ₹6,400 crore by 1988, boosting retail investment.
India (1977):
Reliance Industries’ IPO sparks a “cult of equity,” drawing retail investors.
India (1982):
A bear cartel targets Reliance Industries, causing a share price drop from ₹131 to ₹121. Dhirubhai Ambani counters the short-selling, stabilizing the stock.
India (1986):
The BSE Sensex, a 30-stock index, is launched with a base year of 1978–79 and a value of 100, becoming a key market benchmark.
India (1988):
The Securities and Exchange Board of India (SEBI) is established as a non-statutory body to regulate markets and protect investors.
Global (1987):
Black Monday sees the largest single-day percentage drop in U.S. markets (Dow Jones falls 22.6%), impacting global markets, including India.
1990s: Liberalization and Scandals in India, Global Tech Boom
India (1991):
Economic liberalization opens markets to foreign investment, transforming the Indian economy and stock market.
India (1992):
The Harshad Mehta scam, involving fraudulent bank funds to manipulate stock prices (e.g., ACC Ltd. from ₹200 to ₹9,000), leads to a 13% Sensex crash (570 points) and a two-year bear market. SEBI gains statutory powers in 1992 to strengthen regulation.
India (1992):
The National Stock Exchange (NSE) is incorporated to enhance transparency, launching electronic trading in 1994.
India (1996):
The NSE introduces the Nifty 50 index, a benchmark for 50 large companies, with a base value of 1,000 (1995).
Global (1990s):
The dot-com boom fuels tech stock growth globally, including in India, but the 2000 bubble burst causes significant market declines.
2000s:
Global Crises and Indian Resilience
India (2000s): The Ketan Parekh scam involves market manipulation, leading to regulatory tightening.
India (2004):
The Sensex falls 11.14% after the National Democratic Alliance’s unexpected election defeat, reflecting political sensitivity.
Global (2008):
The global financial crisis, triggered by the U.S. subprime mortgage collapse, causes a major correction in Indian markets (Sensex drops significantly).
India (2008):
Despite the crisis, India’s market recovers, supported by economic reforms and growing investor confidence.
Global:
Electronic trading platforms and derivatives markets expand, with the NYSE and Nasdaq leading innovation.
2010s–2020s:
Digital Transformation and Global Challenges
India (2015–2016):
The Sensex falls 26% due to global weakness and Indian banks’ non-performing assets (NPAs). Demonetization in November 2016 causes a 6% Sensex drop (1,688 points) amid panic selling.
India (2020):
The COVID-19 pandemic leads to a Sensex crash from 42,273 to 28,288 points in a week (13.2% drop on March 23), with ₹13.88 trillion in investor wealth lost.
India (2021):
Post-COVID recovery sees a surge in retail investors, with 7 crore Demat accounts opened. The BSE reaches ₹100 lakh crore in market capitalization in 2014.
Global (2020):
Global markets crash due to COVID-19 lockdowns, with rapid recoveries driven by stimulus and technology stocks.
India (2024):
India’s stock market surpasses Hong Kong’s, becoming the fourth-largest globally at $4.33 trillion. The BSE lists over 5,000 companies, and the NSE is the world’s largest derivatives exchange by contract volume.
India (2025):
On April 7, 2025, the Sensex falls 2.95% (2,226.79 points) to 73,137.90, and the Nifty 50 drops 3.24% (742.85 points) due to fears of a global trade war.
Key Insights -
Indian Stock Market:
Evolved from informal trading under a banyan tree to a sophisticated, technology-driven market with the BSE (1875) and NSE (1992).
Key milestones include SEBI’s formation (1988/1992),
Sensex (1986), Nifty 50 (1996),
and liberalization (1991).
Scandals like Harshad Mehta (1992) and Ketan Parekh (2000s) drove regulatory reforms, while global events (e.g., 2008 crisis, COVID-19) impacted growth.
Today, India’s market is a global leader, with a $5 trillion market cap by 2024.
Global Stock Market:
Originated in Amsterdam (1602), with the NYSE (1792) and London Stock Exchange (1773) shaping modern markets.
Crashes like 1929, 1987, 2000, and 2008 prompted regulatory advancements.
Technology, derivatives, and globalization have driven growth, with the NYSE and Nasdaq leading in market cap.
Interconnectedness:
India’s market reflects global trends, with events like wars, crises, and tech booms influencing both.
The NSE’s dominance in derivatives and India’s economic rise highlight its global integration.
