BSE at 150: India's stock market stands out globally, has grown stronger

The market has faced its share of storms: from the 1992 scam to the global financial crisis. But like a sturdy bull, it has only grown stronger with each challenge

Imagine a time when trading stocks meant shouting bids on a bustling exchange floor, with deals sealed by trust among a tight-knit group of brokers. That was the Indian stock market half-a-century ago. Fast forward to today, and we’re celebrating the 150th anniversary of BSE (formerly Bombay Stock Exchange), Asia’s oldest stock exchange, which has grown into a tech-savvy, globally competitive powerhouse. The Indian stock market’s journey is nothing short of remarkable: a story of innovation, resilience, and opportunity that’s worth celebrating.

 

Back in the day, trading happened in the BSE’s lively “ring,” where brokers, known as jobbers, called out buy-and-sell prices. Without computers or smartphones, trades could take 15 days to settle, and price differences between cities like Mumbai and Ahmedabad — sometimes as high as 5-10 per cent — created arbitrage opportunities. Early players like Motilal Oswal built their businesses by navigating these gaps. It was a simpler time, but not without its challenges, like frequent trade disputes settled through goodwill among brokers.

 

The game changed in 1986 with the launch of the Sensex, a benchmark that put India’s stock market on the map. Then came the wild 1990-92 bull run, led by the infamous Harshad Mehta, which brought markets into every household’s conversation. While it exposed vulnerabilities, it also sparked a wave of reforms that modernised the system.

 

Enter the National Stock Exchange (NSE) in 1994, shaking up BSE’s monopoly with fierce competition. BSE stepped up by embracing electronic trading, and the two exchanges went head-to-head until NSE pulled ahead with derivatives trading at the turn of the century. But BSE has reinvented itself, and today, it’s reclaiming ground with Sensex derivatives, thanks to its strong brand and supportive regulations.

 

Two big leaps truly reshaped India’s markets: dematerialisation (demat) and derivatives. Before the late 1990s, trading meant handling stacks of paper certificates, causing delays and errors. Dematerialisation digitised share ownership, making transactions seamless and sparking a surge in trading volumes. Then came derivatives in the early 2000s, adding new ways to invest and manage risk. These changes turned BSE and NSE into modern, efficient platforms. The market has faced its share of storms: from the 1992 scam to global financial crises. But like a sturdy bull, it’s only grown stronger with each challenge.

 

BSE also transformed itself by becoming a corporate entity, separating brokers from management to meet global governance standards. This shift, along with innovations like Sensex derivatives, has kept BSE vibrant and competitive.

 

What’s truly exciting is how accessible the stock market has become. The digital revolution, especially post-2020, has made investing as easy as a few taps on your phone. Thanks to Aadhaar-linked KYC processes and user-friendly apps, anyone can open a demat account in minutes. Demat accounts have skyrocketed from 40 million in 2020 to 200 million today. More Indians than ever — fuelled by growing financial literacy — are joining the wealth-creation journey, proving that the market isn’t just for the elite. 

 

Stock exchanges don’t just facilitate trading, they’re engines of growth, helping companies raise funds. Since the 1990s, when controlled pricing was scrapped, entrepreneurs have been able to raise capital at fair valuations, ensuring their businesses get the support they deserve. Exchanges also provide liquidity, letting investors buy and sell shares easily, which attracts more investment and fuels innovation.

 

India’s stock market is a global standout, rivalling even the US in sophistication and retail participation, despite our per capita income of less than $3,000. It’s a testament to India’s entrepreneurial spirit. Unlike bank loans that demand collateral and repayment, equity capital from the stock market is permanent, giving entrepreneurs the freedom to dream big and innovate without debt weighing them down.

 

Guided by the Securities and Exchange Board of India (Sebi) and powered by robust trading systems, our markets are set to boost India’s already impressive 6-7 per cent annual economic growth by an extra percentage point. This influx of risk capital supports bold ideas, funds promising ventures, and keeps the system resilient against the occasional bad actor.

 

The Indian stock market has faced its share of storms: from the 1992 scam to global financial crisis. But like a sturdy bull, it’s only grown stronger with each challenge. Reforms like dematerialisation and establishment of Sebi have fortified the system, ensuring it thrives. As retail participation grows and 

 

markets deepen, India’s stock exchanges will continue to empower entrepreneurs, drive economic growth, and cement our place among the world’s financial giants.

 

Here’s to 150 years of BSE and a future where India’s markets keep charging ahead, creating wealth and opportunity for all!

 

The author is chairman & cofounder of Motilal Oswal Financial Services