BSE or The Bombay Stock Exchange is amongst the oldest stock exchanges in India. The exchange is located in Mumbai, on the Dalal Street. The BSE dates back its origin to 1875 and is the 7th largest stock exchange in the world
on the basis of market capitalization.
BSE was the first recognized stock exchange of India. It was recognized by the Indian government on 31st August 1957. The market capitalization of BSE as of February 2021 is more than $2.8 trillion.
History of the Bombay Stock Exchange
The BSE was established in Mumbai in the year 1875 as the Native Share and Stockbroker’s Association. In 1850s Traders and brokers used to gather under a Banyan Tree near Mumbai Town Hall. The number of brokers at that time was limited to only five. As the number increased, they kept on changing locations from Horniman Circle to Esplande Road and so on. Finally, it was the year 1874, when the association got a permanent location near the town hall and the group was registered as an official organization.
Working of the Bombay Stock Exchange
BSE initially traded using an open outcry floor trading mechanism. Traders and brokers gathered on a floor, known as pit, and use voice and hand signals to transfer information about the types of order. This mechanism is also known as floor trading or open floor system.
BSE worked using the floor trading system till 1995. In 1995, the exchange shifted to a modern electronic trading system which was fast, reliable, and more efficient and helped the exchange in eliminating various loopholes which were present in the earlier floor trading system.
Major indices on the Bombay Stock Exchange
The Bombay Stock Exchange has various benchmark indices for tracking the performance. The most prominent one being the BSE Sensex. It is a free-float market-weighted index and includes 30 financially sound and well-established companies listed on the BSE. These companies represent various industrial sectors from the Indian economy. Sensex was initially known as S&P Bombay Stock Exchange Sensitive Index. It was first published on 1st January 1986.
Some of the other indices from the BSE include S&P BSE SmallCap, S&P BSE MidCap, S&P BSE LargeCap and BSE 500.
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