150 years of BSE: When the nation witnessed a rally before independence

The concluding part of the Booms and Busts series looks at the share market rally ahead of Independence, and its eventual decline

The period leading up to Independence had been good for the stock market. 

Shares began to gain momentum after the central Budget of February 1946. There were hopes of availability of cheaper capital, higher dividend, and an accumulation of surplus investible funds. The economic adviser’s general index, a proxy for the stock market used by the Reserve Bank of India (RBI) at the time, gained 12 per cent between June and August. Some profit-booking followed. 

“…profit-taking … was later followed by a violent break in September, following the outbreak of communal disturbances in several parts of the country, the Economic