Investor Tool ▼
t;Dalal Street") for the purpose of transacting business.
||"The Native Share and Stock Brokers' Association" (also known as "The Bombay Stock Exchange") was established in Bombay
||Development of cotton mills industry and set up of many others
||Establishment of "The Ahmedabad Share and Stock Brokers' Association"
|1880 - 90's
||Sharp increase in share prices of jute industries in 1870's was followed by a boom in tea stocks and coal
||"The Calcutta Stock Exchange Association" was formed
||Madras witnessed boom and business at "The Madras Stock Exchange" was transacted with 100 brokers.
||When recession followed, number of brokers came down to 3 and the Exchange was closed down
||Establishment of the Lahore Stock Exchange
||Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange
||Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in South India with establishment of new textile mills and plantation companies
||Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was established
||Establishment of "The Hyderabad Stock Exchange Limited"
Post Independance Scenario
||"Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares Exchange Limited" were established and later on merged into "The Delhi Stock Exchange Association Limited"
The depression witnessed after the Independance led to closure of a lot of exchanges in the country. Lahore Estock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was registered in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized under the Act were:
Many more stock exchanges were established during 1980's, namely:
- Cochin Stock Exchange (1980)
- Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)
- Pune Stock Exchange Limited (1982)
- Ludhiana Stock Exchange Association Limited (1983)
- Gauhati Stock Exchange Limited (1984)
- Kanara Stock Exchange Limited (at Mangalore, 1985)
- Magadh Stock Exchange Association (at Patna, 1986)
- Jaipur Stock Exchange Limited (1989)
- Bhubaneswar Stock Exchange Association Limited (1989)
- Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)
- Vadodara Stock Exchange Limited (at Baroda, 1990)
- Coimbatore Stock Exchange
- Meerut Stock Exchange
At present, there are twenty one recognized stock exchanges in India which does not include the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
Government policies during 1980's also played a vital role in the development of the Indian Stock Markets. There was a sharp increase in number of Exchanges, listed companies as well as their capital, which is visible from the following table:
Trading Pattern of the Indian Stock Market
||As on 31st December
||No. of Stock Exchanges
||No. of Listed Cos.
||No. of Stock Issues of Listed Cos.
||Capital of Listed Cos. (Cr. Rs.)
||Market value of Capital of Listed Cos. (Cr. Rs.)
||Capital per Listed Cos. (4/2)(Lakh Rs.)
||Market Value of Capital per Listed Cos. (Lakh Rs.) (5/2)
||Appreciated value of Capital per Listed Cos. (Lak Rs.)
Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are divided into two categories:
Types of Transactions
The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:
Indian stock exchange allows a member broker to perform following activities:
Over The Counter Exchange of India (OTCEI)
- Act as an agent,
- Buy and sell securities for his clients and charge commission for the same,
- Act as a trader or dealer as a principal,
- Buy and sell securities on his own account and risk.
Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry.
This age-old trading mechanism in the Indian stock markets used to create many functional inefficiencies. Lack of liquidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. In order to overcome these inefficiencies, OTCEI was incorporated in 1990 under the Companies Act 1956. OTCEI is the first screen based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
Advantages of OTCEI
National Stock Exchange
- Greater liquidity and lesser risk of intermediary charges due to widely spread trading mechanism across India
- The screen-based scripless trading ensures transparency and accuracy of prices
- Faster settlement and transfer process as compared to other exchanges
- Shorter allotment procedure (in case of a new issue) than other exchanges
In order to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.
NSE provides exposure to investors in two types of markets, namely:
Wholesale Debt Market -
- Wholesale debt market
- Capital market
Similar to money market operations, debt market operations involve institutional investors and corporate bodies entering into transactions of high value in financial instrumets like treasury bills, government securities, commercial papers etc.
Trading at NSE
Advantages of trading at NSE
- Fully automated screen-based trading mechanism
- Strictly follows the principle of an order-driven market
- Trading members are linked through a communication network
- This network allows them to execute trade from their offices
- The prices at which the buyer and seller are willing to transact will appear on the screen
- When the prices match the transaction will be completed
- A confirmation slip will be printed at the office of the trading member
- Integrated network for trading in stock market of India
- Fully automated screen based system that provides higher degree of transparency
- Investors can transact from any part of the country at uniform prices
- Greater functional efficiency supported by totally computerized network