Indian Stock Market - An Overview

The Indian stock market rose out of a need to strengthen the economy of the country and create a space for the mobilization and allocation of savings and for bringing the investor and the entrepreneur together. Today, the Indian stock market lists the largest number of companies, second only to the United States of America. The market has become increasingly important in the global financial sphere - drawing the interest of an increasing number of international investors. The Indian Stock Market has opened itself up to international investors and with the relative ease that has come into dealing in the stock-exchange today, with the advent of the electronic age, more and more investors are pouring their savings into the Indian stock market, discouraged by the low returns from bank deposits. Altogether, the Indian Stock Market is growing at a steady rate and has come a long way since its relatively humble beginnings in 1875.
The Bombay Stock-Exchange is the first stock-exchange company that was started in India in 1875 as the Native Share and Stock Broker's Association. It started out with a membership count of 318 people and gained permanent recognition from the Government of India only in 1965. Another important Stock-Exchange is the National Stock-Exchange of India; Bombay Stock-Exchange and National Stock-Exchange account for 80% of the trade; besides these two there are twenty-two regional stock-exchanges so far.
The Sensex or sensitive index was first compiled by Bombay Stock-Exchange in 1986, based on the financial performance of thirty benchmark companies. National Stock Exchange's sensitive index, less widely followed than the Bombay Stock Exchange index, comprises of fifty stocks.
Both these exchanges run an automated trading system; Bombay Stock Exchange's trading system is called BSE online Trading or BOLT, whereas National Stock Exchange's trading system is known as National Exchange Automated Trading or NEAT.
The financial market is essentially divided into the money market and the capital market. The securities market uses securities as the commodity to deal with exchanges in financial capital. This market can be further divided into the primary market and the secondary market. The primary market deals with the first trading of newly listed shares whereas the secondary market trades these securities after the first offering.
The Stock Exchange the control of buying, selling and dealing with securities, which includes stocks, shares, bonds, debenture stocks, scrip and government securities.
Before the automated trading systems came about, Bombay Stock Exchange employed an ancient method of trading where stock brokers would assemble in the Bombay Stock Market building and trading was carried forward using a communication system that comprised of a lot of raised voices, shouting and sign language. This system was abused and misused by the brokers - investors were not allowed within this system.
In 1992, the Indian stock market was tainted with a giant fraud - Harshad Mehta was discovered to have diverted huge amounts of money from banks and played with the shares of ninety or so companies. The National Stock Exchange came up soon after this scam, and began its automated trading system. Bombay Stock Exchange gave up its ancient trading systems and followed suit soon after.