The Historical Evolution of Indian Stock Market

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The Historical Evolution of Indian Stock Market | WealthDesk

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Whenever someone mentions the Indian Stock Market, it reminds us of the stock market crashes in history. Recently in March 2020, the stock market (for example, BSE Sensex) gave the signs of recession, falling from 41,257 on February 14, 2020, to 29,815 on March 27, 2020, i.e., a fall of 28%.

However, the picture has completely changed right after that one month of bloodbath in March 2020. The world is observing the shift of power to India. Markets are the leading indicators of the economy. So, the growth of the Indian economy is reflected in the stock market making new highs since a year ago.

Performance of the BSE Sensex from March 2020 to October 2021
Performance of the BSE Sensex from March 2020 to October 2021

The present status of the stock market is the beginning of a new era, but the history of the Indian stock market is pretty interesting.

Let’s now drill into the stock market history.

History of Indian Stock Market

  • There was a paper trade system wherein the brokers used to get records of the price and quantity at the very inception. The best matches were made manually, This is how the market used to get flooded with quotes and sound over the assembly.
  • It all started in 1875 in Bombay, Maharashtra, where the native share and stock broker’s association was formed to trade in securities.
  • By 1992, the BSE Sensex rallied from 1000 to 4000, registering a rise of 300%. This was the time of the big bull- Mr. Harshad Mehta. His voluminous buying led the market to touch highs and highs.
  • After the scam was known, the SEBI (Securities Board of India) was introduced to regulate the unrequired volatility in the stock market.
  • In 2002 and 2003, the settlement period was revised to T+2 business days, and the BSE Sensex shifted to a free-float market.
  • In 2004, the Indian National Congress came back in power, and people have lost faith in the Government. The Sensex falling reflected it by 11.14%, the biggest fall ever. The NSE also launched the EFT listings.
  • After the market fall of 2008, the IPO index was launched. The market time changed from 9:00 AM to 3:30 PM.
  • BSE achieved the landmark of the market capitalization of Rs 100 lakh crores in 2014, and that of SME index, it crossed the Rs. 10 thousand crores.
  • Post COVID-19 2020, the market flooded with loads of investment, and new DEMAT accounts were opened. The confidence of retail investors shifted from safe harbors like fixed deposits to stock market investment. Recently in June 2021, a milestone of 7 crores registered users was recorded.


History of Stock Exchanges

The history of the stock exchange represents the history of the Indian stock market. The stock exchange is the platform where the Investors trade in the stocks. Earlier, India had 29 exchanges India comprising eight national stock exchanges and 21 regional stock exchanges. After the SEBI started tightening the regulations, it closed down all regional stock exchanges in India except the Calcutta Stock Exchange.

Bombay Stock Exchange

Bombay Stock Exchange (BSE) is Asia’s first stock exchange. It was established in the year 1875. It has various indices, and one of the famous indices is the BSE Sensex. The BSE Sensex comprises 30 stocks listed on the BSE. As per the latest information from the BSE website, there are 18,143 securities listed on March 31, 2021.


The market has been rising after the setback caused by the COVID-19. Out of all the listed companies in BSE, only 30 top companies are included in the BSE Sensex, which constitutes the index. These 30 shuffles periodically.

The CAGR of the ten years is as follows:

YearBSE Sensex PriceNo. of years since last priceCAGR

The progress of the BSE market can be visualized in the graph below.

History of BSE
History of BSE

National Stock Exchange

The National Stock Exchange (NSE) was established in 1992. It comprises various indices, and one of the famous indices is the Nifty 50 Index. The Nifty 50 Index comprises 50 entities listed on the NSE. As of March 31, 2021, there are 1920 firms listed on the National Stock Exchange. The Nifty 50 index is nothing but an average of the top 50 companies listed on the National Stock Exchange.

The CAGR of every five years is calculated as follows:

YearsNifty 50 PriceNo. of years since last priceCAGR

The performance of the index since inception can be seen in the below graph:

History of NSE
History od NSE

What Affects the Stock Market in India?

The stock market is not just about the share prices and volumes; many things affect the stock market in India:

  • If we relate the market with economics, the market is affected by economic factors such as household consumption, wealth levels, consumer confidence, the capacity of the factories, business optimism, income of the rest of the world, and home currency rate.
  • Moreover, the rate of interest and the money supply are additional factors that affect the GDP and thereby affect the money flow in the stock market.
  • Further elections and economic reforms play a vital role in India. The market is driven by the strength of the Governance and its policies. The market behaved accordingly in 1994, 2004, and 2014.
  • India is now seen as an emerging economy. Hence, international affairs and economic reforms also affect the Stock market in India.

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The stock market is driven by sentiments like how we behave in a given circumstance. The rise of the market post-COVID-19 is majorly due to an increase in business confidence in India and many things driving positively. You see many stocks breaking the all-time highs due to an increase in potential compared to before COVID-19.


Who started the Indian stock market?

Mr. Premchand Roy Chand, known as the cotton king, started the stockbroking business in 1875.

What are the Indian Stock Market Timings?

The stock market opens at 9:15 AM and closes at 3:30 PM except on public holidays.

Which is the biggest stock exchange in India?

National Stock Exchange (NSE) is the biggest stock exchange in India.

When and how did the stock market begin?

The first stock market started in 1792 in New York at a corner of a road named Wall Street.