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Bombay Stock Exchange

Coordinates: 18°55′47″N 72°50′00″E / 18.9298°N 72.8334°E / 18.9298; 72.8334 (Bombay Stock Exchange)
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BSE Limited
Official logo of BSE[1]
Corporate headquarters on Dalal Street
TypeStock exchange
LocationMumbai, Maharashtra, India
Founded9 July 1875; 149 years ago (9 July 1875)[2]
Key people
CurrencyIndian rupee (₹)
No. of listings5,390[5]
Market cap₹435 trillion (US$5.2 trillion) (June 2024)[6]
Indices
Websitebseindia.com
Company
NSE: BSE
ISININE118H01017
Headquarters
Mumbai Edit this on Wikidata
Websitewww.bseindia.com Edit this on Wikidata

BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange which is located on Dalal Street, known as the Wall Street of Mumbai,[8] in turn described as the New York of India.[9] Established in 1875 by cotton merchant Premchand Roychand,[10] it is the oldest stock exchange in Asia,[11] and also the tenth oldest in the world.[12] The BSE is the world's 7th largest stock exchange with a market capitalization exceeding US$5 trillion as of May 2024.[13]

History

Bombay Stock Exchange logo until June 2023

Bombay Stock Exchange was founded by Premchand Roychand in 1875.[14] While BSE Limited is now synonymous with Dalal Street, it was not always so. In the 1850s, four Gujarati and one Parsi stockbroker gathered together under a Banyan tree in front of Bombay (now Mumbai) Town Hall, where Horniman Circle is now situated.[15] [10]A decade later, the brokers moved their location to under the banyan trees at the junction of Meadows Street and what was then called Esplanade Road, now Mahatma Gandhi Road. With a rapid increase in the number of brokers, they had to shift places repeatedly. At last, in 1874, the brokers found a permanent location, the one that they could call their own. The brokers group became an official organization known as "The Native Share & Stock Brokers Association" in 1875.[16]

On 12 March 1993, a car bomb exploded in the basement of the building during the 1993 Bombay bombings.[17] The BSE is also a Partner Exchange of the United Nations Sustainable Stock Exchange initiative, joining in September 2012.[18] BSE established India INX on 30 December 2016. India INX is the first international exchange of India.[19] BSE became the first stock exchange in the country to launch commodity derivatives contract in gold and silver in October 2018.[20]

BSE was demutualized and corporatized on 19 May 2007, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by SEBI.[21][22] It was listed on NSE on 3 February 2017.[23][24][a]

Market statistics

  • The Bimal Jalan Committee report estimated that barely 3% of India's population invested in the stock market, as compared to 27% in the United States and 10% in China.[26][27][28][29]
  • The Economic Times estimated that as of April 2018, 6 crore (60 million) retail investors had invested their savings in stocks in India, either through direct purchases of equities or through mutual funds.[30]
  • Morgan Stanley has noted that the Indian stocks have been through four bear markets in 25 years, or since foreign investors became actively involved with Indian equities.[31] The Economic Times estimate that the Indian stock market sees a bear market on average once every 3 years, similar to the US market. It uses the Nifty 50 index as a reference point and identifies eight 20% drops in the last 25 years.[32]
  • According to SEBI, during FY 2022–23, 73% of mutual fund units were redeemed within 2 years of investment. Only investments in 3% of the units continued for more than 5 years.[33][34]
  • Another study conducted by the SEBI, approximately 89% of individual stock traders in the equity Futures & Options (F&O) segment incurred losses during the financial year 2021-22.[35][36][37]
  • According to a Reserve Bank of India report, mutual funds attracted 6% of household savings in FY2023 and less than 1% went into direct equities.[38][39][40] Almost 95% of household savings in India are held in bank deposits, including fixed deposit, provident fund, PPF, life insurance, and various small savings schemes.[38][41][40]
  • Maharashtra accounts for the most number of investors. More than 15 million or 21 percent of registered investors with the BSE are from the state, followed by Gujarat (8.6 million), Uttar Pradesh (5.3 million), Tamil Nadu (4.3 million) and Karnataka (4.2 million). These five states account for more than half or 53 percent of all the registered investors.[42][43]
Indian stock market indices S&P BSE 500 (1999 to 2020)
Chart of S&P BSE SENSEX monthly data from January 1991 to May 2013

Criticism and controversies

Main articles: 1992 Indian stock market scam, Harshad Mehta, and Ketan Parekh
See also: NSE co-location scam

The Indian stock exchanges BSE and NSE have witnessed several high-profile corruption scandals.[44][45][46][47][48] At times, the Securities and Exchange Board of India (SEBI) has barred several individuals and entities from trading on the exchanges for insider trading, stock manipulation, especially in illiquid mid-caps, small-caps and penny stocks.[49][50][51][52]

Market operators illegal activity

Market operators continue to operate in the Indian stock market, albeit within a regulatory framework aimed at ensuring transparency and fairness. Market operators are individuals or entities that actively engage in buying and selling securities to influence their prices for profit. They operate through various strategies, such as arbitrage, short selling, high-frequency trading, front running, churning, scalping, wash trading, spoofing, and layering, often leveraging sophisticated technology and large capital. Regulatory bodies like the Securities and Exchange Board of India (SEBI) oversee market activities to curb malpractices such as insider trading, price rigging, and market manipulation. SEBI has implemented measures, including surveillance systems, to detect and penalize unethical practices. Despite these regulations, market operators exploit loopholes to gain an edge, necessitating continuous vigilance and regulatory updates. Market operators in India often use the "pump and dump" strategy, despite strict regulations against such practices. The "pump and dump" scheme involves artificially inflating the price of a stock (pump) through false or misleading positive statements. Once the price has been significantly raised, the operators then sell off their holdings (dump) at the inflated prices, leading to a sharp price decline and substantial losses for other investors who bought in at the higher prices. Their activities have continued to impact market volatility, liquidity, and price discovery, playing a significant role in the dynamics of the Indian stock market.[53][54][55][56][57]

See also

References

Notes

  1. ^ SEBI Regulation 45(1) of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 prohibits self-listing of a stock exchange in India.[25]

Citations

  1. ^ "BSE unveils new logo on its 149th foundation day". mint. 10 July 2023.
  2. ^ India, BSE. "Corporate profile" (PDF). Archived (PDF) from the original on 25 September 2021. Retrieved 8 August 2020.
  3. ^ "Pramod Agrawal to take charge as BSE's new Chairman from January 17". Business Standard. 20 December 2023.
  4. ^ "bse bod". Archived from the original on 11 January 2023. Retrieved 11 January 2023.
  5. ^ "All India Market Capitalization | BSE Listed stocks Market Capitalization". BSE. Retrieved 9 July 2023.
  6. ^ Patwardhan, Mayank. "India reclaims fourth-biggest global equity market tag from Hong Kong". bussiness-standard.com. Retrieved 20 June 2024.
  7. ^ "BSE relaunches Sensex, Bankex derivative contracts". The Economic Times. 15 May 2023.
  8. ^ James Chen. "What Is Dalal Street?". Dotdash Meredith.
  9. ^ "Mumbai Is India's New York". NPR. Retrieved 18 February 2024.
  10. ^ a b "BSE-Introduction". bseindia.com. Archived from the original on 31 January 2018. Retrieved 31 January 2018.
  11. ^ Priya Rawal (16 April 2015). Indian Stock Market and Investors Strategy. Priya Rawal. pp. 12–. ISBN 978-1-5053-5668-7. Archived from the original on 11 January 2023. Retrieved 23 November 2018.
  12. ^ "10 Oldest Stock Exchanges in the World". 10 September 2020. Archived from the original on 4 March 2021.
  13. ^ "Monthly Reports - World Federation of Exchanges". WFE. Archived from the original on 11 January 2023. Retrieved 21 May 2018.
  14. ^ "BSE may set another record, become an official tourist spot". The New Indian Express. Press Trust of India. 6 October 2017. Archived from the original on 4 November 2021. Retrieved 4 November 2021.
  15. ^ "The Profile of the Bombay Stock Exchange Limited".
  16. ^ "The History of Bombay Stock Exchange". YouTube. Archived from the original on 30 October 2021.
  17. ^ "The 1993 Mumbai Blasts: What Exactly Happened on March 12 That Year". News18. Archived from the original on 16 October 2017. Retrieved 16 October 2017.
  18. ^ "Bombay Stock Exchange (BSE) commits to promoting sustainability". UNCTAD. 28 September 2012. Archived from the original on 2 April 2015. Retrieved 29 April 2016.
  19. ^ "India INX". indiainx.com. Archived from the original on 18 October 2018. Retrieved 15 March 2018.
  20. ^ "India thehindubusinessline". Business Line. October 2018. Archived from the original on 27 July 2020. Retrieved 25 October 2018.
  21. ^ "BSE demutualisation complete". Business Standard India. Business Standard. 14 June 2013. Archived from the original on 27 November 2022. Retrieved 27 November 2022.
  22. ^ "Order in respect of BSE (Corporatisation and Demutualisation) Scheme, 2005". sebi.gov.in. Archived from the original on 27 November 2022. Retrieved 27 November 2022.
  23. ^ "BSE to list on NSE on 3 February". Livemint. 29 January 2017. Archived from the original on 27 November 2022. Retrieved 27 November 2022.
  24. ^ Manu Balachandran (22 January 2017). "142 years after taking roots under a banyan, Asia's oldest stock exchange hits the capital market today". qz.com. Quartz. Archived from the original on 27 November 2022. Retrieved 27 November 2022.
  25. ^ "Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 [Last amended on June 04, 2019]". sebi.gov.in. Archived from the original on 11 January 2023. Retrieved 27 November 2022.
  26. ^ "Increasing retail investor base: SEBI has a tough job ahead". Moneylife. 2 June 2011. Retrieved 24 April 2018.
  27. ^ Jalan, Bimal (1 November 2010). Jalan Committee report 2010 – Review of Ownership andGovernance of Market Infrastructure Institutions (PDF). Mumbai: SEBI. Retrieved 24 April 2018.
  28. ^ Chandrasekhar, C.P.; Mallick, Sarat; A, Akriti. The elusive retail investor: How deep can (and should) India's stock markets be? (PDF). SEBI. Retrieved 24 April 2018.
  29. ^ Library of Congress, Federal Research Division (30 December 2011). FINANCIAL LITERACY AMONG RETAIL INVESTORS IN THE UNITED STATES (PDF). Washington DC: SEC / The library of congress. Retrieved 24 April 2018.
  30. ^ Thukral, Arun (24 April 2018). "For those who do not make much money in stocks, here's the catch". The Economic Times. Retrieved 24 April 2018.
  31. ^ "India faced 4 bear markets in 25 years; why this one is different". CNBCTV18. 25 March 2020. Retrieved 26 January 2024.
  32. ^ Bhasin, Tinesh (29 December 2022). "Best Investment Strategies To Survive in a Bear Market". Learn About Investment Tax Saving, and Financial Planning. Retrieved 26 January 2024.
  33. ^ "SEBI | Annual Report 2021-22". www.sebi.gov.in.
  34. ^ Agarwal, Nikhil (24 May 2023). "50% mutual funds get redeemed within a year. Is long-term investing dead?". The Economic Times.
  35. ^ "SEBI | Study - Analysis of Profit and Loss of Individual Traders dealing in Equity F&O Segment". www.sebi.gov.in.
  36. ^ "Sebi study suggests 89% retail traders in equity F&O suffered losses in FY22". The Economic Times. 25 January 2023.
  37. ^ "9 in 10 derivative traders lose money: Sebi study". The Times of India. 26 January 2023.
  38. ^ a b "Reserve Bank of India - RBI Bulletin". www.rbi.org.in. Retrieved 4 March 2024.
  39. ^ https://www.business-standard.com/markets/mutual-fund/mutual-funds-attract-6-of-household-savings-in-fy23-shows-rbi-data-123092000972_1.html
  40. ^ a b "Reserve Bank of India - Household Financial Savings". www.rbi.org.in. Retrieved 4 March 2024.
  41. ^ https://www.business-standard.com/markets/mutual-fund/mutual-funds-attract-6-of-household-savings-in-fy23-shows-rbi-data-123092000972_1.html
  42. ^ Vardhan, Pratap (8 September 2022). "Data | Which Indian State has the most number of stock market investors". The Hindu. ISSN 0971-751X. Retrieved 26 January 2024.
  43. ^ "These 10 states account for nearly 80% of retail investors". Moneycontrol. 7 June 2021. Retrieved 26 January 2024.
  44. ^ "How India's trading queen and mystery guru engulfed NSE in scandal". The Economic Times.
  45. ^ Rangan, MC Govardhana. "The fall of NSE: Corruption or hubris?". The Economic Times.
  46. ^ "BSE Sensex drops as corruption scandal weighs". Reuters. 25 November 2010.
  47. ^ "SEBI penalises BSE, NSE for 'laxity' in Karvy fraud case". 13 April 2022.
  48. ^ "Trading 'queen' and mystery guru: Strange tale engulfs NSE in scandal". Business Standard India. 21 March 2022.
  49. ^ Sreedhar, Vidya (21 June 2023). "Rs 144 crore wrongful profit! Sebi finds stock manipulation in 5 smallcaps". The Economic Times. Retrieved 24 August 2023.
  50. ^ "Sebi ban pinches penny stocks". Business Standard. Retrieved 24 August 2023.
  51. ^ "SEBI Cracks Down on Misuse of Penny Stocks". The Wire. Retrieved 24 August 2023.
  52. ^ "I-T Department, SEBI begin crackdown on penny stock firms in PMO-led push". Moneycontrol. 20 November 2017. Retrieved 24 August 2023.
  53. ^ Uppal, Jamshed Y., and Inayat U. Mangla. “Market Volatility, Manipulation, and Regulatory Response: A Comparative Study of Bombay and Karachi Stock Markets.” The Pakistan Development Review, vol. 45, no. 4, 2006, pp. 1071–83. JSTOR 41260669. Accessed 30 May 2024.
  54. ^ Goel, A., Tripathi, V. and Agarwal, M. (2021), "Market microstructure: a comparative study of Bombay stock exchange and national stock exchange", Journal of Advances in Management Research, Vol. 18 No. 3, pp. 414-442. doi:10.1108/JAMR-06-2020-0109
  55. ^ https://www.researchgate.net/profile/Chakrapani-Chaturvedula/publication/311446941_The_Effectiveness_of_Trade_for_Trade_Segment_as_a_Surveillance_Effort_to_Prevent_Price_Manipulation_Evidence_from_India/links/58f7a2094585158d8a6c176e/The-Effectiveness-of-Trade-for-Trade-Segment-as-a-Surveillance-Effort-to-Prevent-Price-Manipulation-Evidence-from-India.pdf
  56. ^ Elangovan, Rajesh; Irudayasamy, Francis Gnanasekar; Parayitam, Satyanarayana (2022). "Testing the market efficiency in Indian stock market: Evidence from Bombay Stock Exchange broad market indices". Journal of Economics, Finance and Administrative Science. 27 (54): 313–327. doi:10.1108/JEFAS-04-2021-0040. hdl:10419/289641.
  57. ^ Prabu, A.E., Bhattacharyya, I. & Ray, P. Impact of monetary policy on the Indian stock market: Does the devil lie in the detail?. Ind. Econ. Rev. 55, 27–50 (2020). doi:10.1007/s41775-020-00078-2

Further reading

  • Kochhar, S. (2015). BSE: Journey of an Aspiring Nation. Skoch Media. ISBN 978-8-1929-1725-2.
  • Ramkumar, R.R. and Selvam, M. (2014). Efficiency of BSE Sectoral Indices in India: A Study with Special Reference to Bombay Stock Exchange Ltd in India. Lap Lambert Academic Publishing GmbH KG. ISBN 978-3-6592-1130-0.{{cite book}}: CS1 maint: multiple names: authors list (link)
  • Kaur, H. (2002). Stock Market Volatility in India. Deep & Deep Publications. ISBN 978-8-1762-9361-7.
  • Basu, D. and Dalal, S. (1993). The Scam: Who Won, who Lost, who Got Away. UBS Publishers' Distributors. ISBN 978-8-1859-4410-4. LCCN 93902443.{{cite book}}: CS1 maint: multiple names: authors list (link)
  • Hiremath, G.S. (2013). Indian Stock Market: An Empirical Analysis of Informational Efficiency. Springer India. ISBN 978-8-1322-1590-5. LCCN 2013946889.
  • Cummings, L. (2014). Rethinking the BSE Crisis: A Study of Scientific Reasoning under Uncertainty. Springer Netherlands. ISBN 978-9-4017-8491-7.
  • Razdan, A. Scaling in the bombay stock exchange index. Pramana - J Phys 58, 537–544 (2002). doi:10.1007/s12043-002-0063-y
  • Goel, A., Tripathi, V. and Agarwal, M. (2021), "Market microstructure: a comparative study of Bombay stock exchange and national stock exchange", Journal of Advances in Management Research, Vol. 18 No. 3, pp. 414-442. doi:10.1108/JAMR-06-2020-0109
  • Krishnamurti, Chandrasekhar and Eleswarapu, Venkat R., Liquidity, Stock Returns and Ownership Structure - An Empirical Study of the Bombay Stock Exchange (March 31, 1994). IIM Bangalore Research Paper No. 65, Available at SSRN 2181543 or doi:10.2139/ssrn.2181543
  • Sumon Kumar Bhaumik. “Stock Index Futures in India: Does the Market Justify Its Use?” Economic and Political Weekly, vol. 32, no. 41, 1997, pp. 2608–11. JSTOR 4405950. Accessed 13 Feb. 2024.
  • Ganeshaiah, K. N. “Has the Behaviour of the Stock Market Been Affected by the Scam? — A Statistical Analysis.” Current Science, vol. 63, no. 7, 1992, pp. 345–47. JSTOR 24095453. Accessed 13 Feb. 2024.
  • Nair, S. (2021). Bulls, Bears and Other Beasts (5th Anniversary Edition): A Story of the Indian Stock Market. Pan Macmillan. ISBN 978-9-3907-4257-8.
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18°55′47″N 72°50′00″E / 18.9298°N 72.8334°E / 18.9298; 72.8334 (Bombay Stock Exchange)

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