The Tulip Bubble of 1630, also known as Tulip Mania, was a speculative frenzy that gripped the Dutch Republic during the Golden Age. Tulip bulbs, particularly rare and exotic varieties, became wildly popular and their prices soared to absurd levels. People from all walks of life, from merchants to laborers, invested their fortunes and even futures in these blooms. At its peak, a single tulip bulb could cost as much as a grand house. However, the bubble inevitably burst in early 1637, causing financial ruin for many and serving as a cautionary tale in the history of financial markets about the dangers of irrational exuberance and speculative bubbles

Tulip Bubble/ "Tulipmania" of the 1630s

In 1687, William Phips achieved remarkable success on his expedition by discovering a sunken ship carrying an astonishing 32 tons of treasure. This extraordinary find yielded a spectacular 10,000% return on investment for the backers of the venture, igniting a speculative frenzy in London's investment circles. This craze gave rise to numerous "sea diving engine" companies, promising extended underwater exploration for treasure hunters, although many of them turned out to be fraudulent schemes. Simultaneously, the stock market saw a surge in Initial Public Offerings (IPOs). However, the market crash of 1696 had a devastating impact, leading to the collapse of 70% of the 140 English and Scottish listed companies that had emerged since 1693.

IPO bubble, 1690s

The Mississippi Bubble was a financial scheme in France, orchestrated by Scottish economist John Law. It involved the issuance of vast amounts of paper money and the speculative trading of shares in the Mississippi Company, which held a monopoly on trade in the French colonies. The bubble burst when the value of the company's assets was questioned, resulting in a financial crisis and economic turmoil in France.

The Mississippi Bubble, 1720

The Panic of 1819 is often referred to as America's inaugural depression. It stemmed from a real estate boom driven by the U.S. government's need to settle debts accrued during the War of 1812. Land grants were sold, often on credit, thanks to prior legislation and the proliferation of state banks offering affordable loans. However, a European crop downturn had cascading consequences that led to a significant economic downturn, marking America's first authentic "depression".

America's first depression, 1819

The 19th century witnessed a significant coal boom in India. The British colonial rulers recognized the nation's vast coal reserves and began extensive mining operations. Coal became a crucial resource, fuelling industrialization, transportation, and energy production. The growth of the railway system and the emergence of coal-dependent industries transformed India's economy, contributing to the country's integration into the global market and laying the foundation for its modern industrial sector.

Coal boom, 1850s

With the onset of the American Civil War, America stopped exporting cotton to Europe. This resulted in a cotton famine and Europe looked towards India to fill the vacuum. In the five years of war, the European demand for cotton doubled. By 1865, India was exporting 11,87,000 bales of cotton to Europe and only 14,000 bales of cotton elsewhere. As a result, 84.82 crores worth of bullion made its way to the vaults of Bombay. Investors flocked to cotton stocks, causing prices to skyrocket. This speculative frenzy ultimately led to a market crash in 1865.

Cotton Share Mania, 1860s

“… 50 million sterling, if not more, of real wealth had been allowed to disappear like the baseless fabric of a vision, and how on the debris of such fabric the Bombay (now known as Mumbai) of today was re-built…”- DE Wacha, A Financial Chapter in the History of Bombay City. The American Civil War, which took place from 1861 to 1865, had a profound impact on global cotton supplies. Amidst the crisis, India emerged as a crucial alternative source of cotton for the textile mills of Europe. The Bombay Presidency, in particular, played a pivotal role in supplying cotton to meet this growing demand.

Cotton Boom and Bust: The Legacy of Indias First Stock Market Crash (Share Mania of 1861-1865)

With the onset of the American Civil War, America stopped exporting cotton to Europe. That resulted in a cotton famine and Europe looked towards India to fill the vacuum. In the five years of war, the European demand for cotton doubled. By 1865, India was exporting 11,87,000 bales of cotton to Europe and only 14,000 bales of cotton elsewhere. As a result, 84.82 crores worth of bullion made its way to the vaults of Bombay.

Share Mania, 1865

Following the 1860s crisis, a growing number of tea plantations transitioned to ownership by forward-thinking companies willing to make substantial long-term investments. Factors such as robust global demand for Indian tea, limited competition from both foreign and Indian planters, affordable land prices for establishing gardens, and access to inexpensive labour collectively fostered the expansion and success of India's tea industry. The tea boom of the 1880-90 had a profound impact on India's economy, society, and the tea industry itself. 

1860 के दशक के संकट के बाद, चाय बागानों की संख्या में लगातार बढ़ोतरी होने लगी और कुछ दूरदर्शी कंपनियों ने लम्बे समय के लिए उनमें निवेश करने के इरादे से चाय बगान खरीदे ।  भारत की चाय की विदेशों में मांग बहुत अधिक थी, विदेशी और भारतीय चाय बागान के मालिकों में प्रतिस्पर्धा नाम मात्र की ही थी, चाय बागानों के लिए जमीन सस्ती मिल जाती थी और चाय बागानों में काम करने के लिए श्रमिक भी सस्ते में ही मिल जाते थे ।  इन्हीं वजहों से भारत में चाय उद्योग काफी सफल हुआ ।  1880 से 90 के बीच चाय के व्यवसाय में जो उछाल आया उसका भारत की अर्थव्यवस्था, समाज और पूरे चाय उद्योग पर भी खासा प्रभाव पड़ा ।

Tea boom, 1880-90

चाय की माँग में उछाल, 1880-90

A remarkable "Bicycle Mania" in Britain saw an incredible 671 bicycle companies become publicly traded in just 2.5 years. This surge in demand and interest was driven by technological advancements that modernized bicycles, transitioning from the older penny-farthing design to the more familiar, contemporary models we recognize today.

"Bicycle Mania", 1890s

Improvement in the prices of Jute Shares subsequent to the Budget Statement by Sir William Meyer during 1918.  The market had presumably come under the influence of the provisional statement of civil revenue.

Calcutta commerce - The budget statement

In June 1929, the cotton textile industry in Bombay witnessed calamitous strikes. But the tide completely turned within a few months with the Wall Street crash in September and the following world economic crisis and depression. Exports and imports in India fell drastically, badly affecting seaborne trade in the region and leaving a deep impact on the Indian railway and agricultural sectors in particular. 

जून 1929 में, बंबई में सूती कपड़ा उद्योग ने ऐसी हड़तालों का सामना किया, जिनकी वजह से इस उद्योग की गति पर ही विराम लग गया ।  लेकिन सितम्बर में वॉल स्ट्रीट क्रैश और उसके बाद दुनियाभर में आए आर्थिक संकट और मंदी के कारण कुछ ही महीनों में स्थिति पूरी तरह बदल गई ।  भारत में निर्यात और आयात में भारी गिरावट आई, जिसकी वजह से यहाँ से होने वाला समुद्री व्यापार बुरी तरह प्रभावित हुआ ।  समुद्री व्यापार प्रभावित होने से भारतीय रेलवे और खास तौर पर कृषि क्षेत्रों पर भी पर भी बुरा असर पड़ा ।

Wall Street crash of 1929 and impact on the Indian economy (Article already exist, to be replaced)

1929 में वॉल स्ट्रीट में अचानक आई भारी गिरावट और भारतीय अर्थव्यवस्था पर उसका प्रभाव

By 1932, economic conditions were on the recovery path from the Great Depression. The price of steel products soared, and that was reflected in a steep rise in the prices of steel companies shares. In particular, the Calcutta Stock Exchange saw frantic trade in the steel company's shares. Iron shares forged ahead from below Rs. 9 in June 1936 to Rs. 30 in January 1937 and Rs. 80, along with a sharp rise in the price index from about 110 in 1935-36 to 129 in September 1937.

वर्ष 1932 तक आर्थिक परिस्थितियाँ महामंदी से उबरने की राह पर थीं ।  स्टील से बनी वस्तुओं की कीमत आसमान छू रही थी, जिसकी वजह से स्टील कंपनियों के शेयरों की कीमतें काफी बढ़ गई थीं ।  विशेष रूप से, कलकत्ता स्टॉक एक्सचेंज में स्टील कंपनियों के शेयरों में बहुत ज्यादा ट्रेडिंग हो रही थी ।  लोहे के कारबार से जुड़ी कंपनियों के शेयरों की कीमत जून 1936 में जहाँ 9 रुपये के आस-पास थी, वही जनवरी 1937 तक उनकी कीमत बढ़कर 30 रुपये और फिर 80 रुपये तक चली गई ।  इसके अलावा, कीमत सूचकांक (प्राइस इंडेक्स) में भी काफी तेजी आई और यह 1935-36 के 110 से बढ़कर सितम्बर 1937 में 129 हो गया ।

Steel Boom, 1937

स्टील की मांग में तेजी, 1937

The share values experienced a landslide on the stock exchanges in Calcutta and Delhi. Equities slumped heavily, with hardly any worthwhile breaks. The causes of the downtrend were manifold. The immediate concern was in regard to the Indo-Pakistan relations following the Security Council debate over Kashmir.  Fears of fresh taxation in the budget added uncertainties.

Equities easy in Calcutta & Delhi stocks slump

On March 18, 1982, Reliance Industries share price crashed from Rs. 131 to Rs. 121 within half an hour as over 3.5 lakh shares were sold, triggering panic. It later emerged that a Kolkata bear syndicate had engineered this crash to buy back cheap shares. However, a group of brokers called 'Friends of Reliance' started aggressively buying the dumped shares, acquiring over 8.57 lakh of the 11 lakh shares sold. They forced the price back to Rs. 125 before market close. When settlement day reached, as the buyers demanded delivery and as the sellers failed to meet their obligations, BSE had to be closed for three trading days to resolve the dispute.

Market crash, 1982

On October 19, 1987, markets crashed across the globe. The Dow Jones Industrial Average dropped 22.6% in a single session, a loss that remains the biggest one-day stock market decline in history. Known as 'Black Monday' the crash was attributed to factors like computerized trading and economic concerns and highlighted the vulnerability of financial markets to sudden, widespread panic selling.

Black Monday, 1987

The Bombay Stock Exchange (BSE) re-opened for trading after a lapse of five days to a barrage of selling which pushed the BSE index down by a whopping 570 points.

BSE Index drops 570 points

The Bombay Stock Exchange (BSE) sensitive index dipped 86.99 points following reports in Times of India newspaper that the Securities and Exchange Board of India was considering the abolition of forward trading on all markets. 

Mixed reaction to badla ban proposal. BSE Index dipped, 1993

The Asian Financial Crisis was a devastating economic event that began in Thailand and rapidly spread throughout Southeast Asia. A sharp currency devaluation, excessive debt, and speculative investments triggered the crisis. It exposed vulnerabilities in Asian economies and led to sharp stock market declines, currency collapses, and the need for international bailouts. This crisis spurred financial reforms and greater global financial cooperation.

Asian Financial Crisis, 1997

The technology bubble burst was a pivotal event in the history of stock markets. Fuelled by speculative investments in internet-related companies, stock prices soared to unsustainable levels. When many of these companies failed to meet expectations, the bubble burst, leading to a sharp decline in technology stocks. This event underscored the importance of rational investing and risk assessment in the digital age.

Dotcom bubble burst, 2000

In May, NDA lost the elections and UPA returned to power with the support of left parties. That result triggered the first circuit breaker on May 17 at 10:15 AM, when BSE SENSEX fell by 356 points. The circuit breaker was triggered at 10% threshold level. When the markets opened at 11:15 AM, SENSEX fell again by 487 points. Finally, the markets opened at noon after the government’s assurances and buyers support. The SENSEX recovered from its lowest point of 4227 to 4505 by the end of the day.

Political event triggers first circuit breaker, 2004

On May 22, the circuit breakers were triggered when the CNX NIFTY fell by 340 points. It happened when brokers dumped client stocks to meet margin requirements. The markets halted for one hour and then resumed. By the end of the day, the NIFTY had recovered from a low of 2896 to 3081.

Market crash triggers circuit breaker, 2006

The idea of a stock market was born in Venice, a meeting place of merchants from across the world. The city served as a hub for trading government securities and shares in maritime ventures. Venice's stock market set a precedent for organized securities trading and laid the groundwork for future stock exchanges, contributing to the development of modern financial markets. Later, the English, French, and Dutch trading companies established companies with limited liabilities to raise funds from investors in exchange for a slice of the profits.

Origin of the stock market, Venice, 14th century

While the Dutch and Portuguese East India companies led the way, English traders in the East Indies gained traction with a pivotal advantage: the Royal Charter of 1600, granting them a trade monopoly east of the Cape of Good Hope. Recognizing the need for capital and strategic partnerships, these English traders embarked on a pioneering path. The English East India Company emerged as the world's first joint-stock company, a trailblazing institution that not only supported their infrastructure but also financed daring voyages, notably to India, shaping the future of global trade and commerce.

Birth of the world's first joint stock company to trade with the East, 1600

On March 20, 1602, the Dutch East India Company officially declared its IPO in its founding charter. In August 1602, the company opened up shares for investment to all Dutch citizens, a ground-breaking departure from the tradition of exclusive investments by affluent groups. When the IPO subscription concluded , approximately 1,100 individuals had acquired shares, marking a significant shift in the accessibility of public investments.

World's first IPO, 1602

The Dutch East India Company (VOC) issued its inaugural dividend to investors. Although the company was established in 1602 with a lucrative trade monopoly, it was shareholder pressure, notably from Isaac Le Maire, that prompted the VOC to distribute dividends, albeit in the form of spices initially. Shareholders received mace equivalent to 75% of the nominal capital. The first cash dividend from the VOC didn't materialize until 1612.

The first dividend, 1610

Joseph de la Vega's book Confusion of Confusions (written in Spanish as Confusión de Confusiones) was the first written work to give an analysis of the stock market, especially the Amsterdam stock exchange. The book takes the form of a dialogue among an investor, philosopher, and merchant, with the investor elucidating the intricacies of the stock market. He explained the role of market participants and the intricacies of speculation and trading. He put forward four rules of speculation that are still relevant today. 

First book to analyse the stock market, 1688

The history of the New York Stock Exchange begins with the signing of the Buttonwood Agreement by twenty-four New York City stockbrokers and merchants outside of 68 Wall Street under a Buttonwood tree. In the beginning, there were five securities traded in New York City, with the first listed company on the NYSE being the Bank of New York. This historic agreement laid the foundation for organized securities trading in the United States and eventually led to the development of the NYSE.

Buttonwood Agreement, May 1792

America's first telegraph line linked Washington, D.C., to Baltimore, Maryland, marking a transformative moment in American communication. The first transmitted message, "What hath God wrought," drawn from the Bible, symbolized its profound significance. Samuel Morse, the inventor, reshaped long-distance communication, and its financial industry impact was so significant that one observer declared the end of "distance and time."

Invention of the Telegraph, 1844

The Bombay Spinning and Weaving Co. was incorporated as a joint stock company. It was the first cotton mill in India. It marked the beginning of India's industrialization, powered by steam engines. The Bombay Spinning and Weaving Company, founded by Parsi entrepreneur Cowasji Nanabhai Davar in 1854, held a prominent place in India's textile industry during the British colonial era. This pioneering company contributed significantly to the growth of Bombay (now Mumbai) as an industrial center. It played a pivotal role in the development of the region's textile manufacturing capabilities, marking a crucial milestone in India's industrialization. The Bombay Spinning and Weaving Company remains a historical symbol of early Indian entrepreneurship and textile production.

First cotton mill of India, 1851

The Acland Mill was set up in Rishra by British entrepreneur George Acland and Bengali financier Babu Bysumber Sen. It was under the supervision of a Dundonian, who helped install the first jute spinning machinery in the undivided Presidency of Bengal (currently Hooghly district). 

First Indian jute mill, 1855

The first modern mutual fund was formed with the creation of Massachusetts Investors’ Trust (MIT) in Boston, Massachusetts on March 21. It marked a milestone in investment management by allowing small investors to pool their resources, diversify their holdings, and benefit from professional management. This innovation democratized investing, shaping the modern financial landscape.

First modern mutual fund, 1924

Electronic Communication Networks (ECNs) emerged as a pivotal development in electronic trading. ECNs provided alternative platforms for traders to execute orders, allowing for greater transparency and competition. Institutions and retail investors could access real-time market data and interact directly with one another, bypassing traditional exchanges. This innovation contributed to increased market efficiency and paved the way for electronic trading's widespread adoption in the financial industry.

Electronic Communication Networks (ECNs), 1980s

This event marked a significant milestone in India's financial sector, as it allowed retail investors to buy shares in UTI, a leading mutual fund institution. The IPO's success showcased the growing interest in financial markets among Indian investors and paved the way for further reforms in the country's investment landscape.

यूनिट ट्रस्ट ऑफ इंडिया का आईपीओ भारत के आर्थिक जगत के लिए एक बड़ी घटना थी, क्योंकि इस आईपीओ में छोटे निवेशकों ने भी पैसा लगाया था और इस प्रकार उन्हें यूटीआई जैसी प्रमुख म्यूचुअल फंड संस्था के शेयर खरीदने का मौका मिला था ।  यह आईपीओ पूरी तरह से सफल हुआ था, जिससे यह जाहिर था कि भारतीय निवेशकों में वित्तीय बाजारों में निवेश करने के प्रति दिलचस्पी बढ़ रही है और इस प्रकार इस आईपीओ ने भारत में निवेश की दिशा में और सुधार लाने का मार्ग प्रशस्त किया । 

Unit Trust of India IPO, 1987

यूनिट ट्रस्ट ऑफ इंडिया का आईपीओ, 1987

The first private sector mutual fund (Kothari Pioneer, now Franklin Templeton) introduced its initial two schemes (Kothari Pioneer Bluechip Fund and Kothari Pioneer Prima Fund). This event paved the way for the entry of private sector into India's mutual fund (MF) industry, which had previously been dominated by the government-owned Unit Trust of India (UTI). Private sector participation triggered a remarkable expansion in the variety and quantity of MF schemes. 

वर्ष 1993 में पहली बार निजी क्षेत्र के म्यूचुअल फंड कोठारी पायनियर (जिसे अब फ्रैंकलिन टेम्पलटन के नाम से जाना जाता है) द्वारा म्यूचुअल फंड की दो स्कीमें (कोठारी पायनियर ब्लूचिप फंड और कोठारी पायनियर प्राइमा फंड) लाई गईं ।  जहाँ पहले भारत में इस क्षेत्र में केवल सरकारी स्वामित्व वाली यूनिट ट्रस्ट ऑफ इंडिया (यूटीआई) की ही स्कीमें हुआ करती थीं, तो वहीं कोठारी पायनियर द्वारा स्कीमें लाई जाने के बाद निजी क्षेत्र द्वारा भी म्यूचुअल फंड की स्कीमें लाई जाने लगीं और फिर देखते ही देखते निजी क्षेत्र द्वारा म्यूचुअल फंड की तरह-तरह की स्कीमें लाई जाने लगीं ।  इस प्रकार, निजी क्षेत्र द्वारा लाई जाने वाली म्यूचुअल फंड की स्कीमों की संख्या में भारी वृद्धि दर्ज हुई । 

First private sector mutual fund, 1993

निजी क्षेत्र द्वारा शुरू किया गया पहला म्यूचुअल फंड, 1993

The launch of the National Securities Depository Limited has set in motion the most significant piece of reform in the country’s capital market. The depository will bring in paperless trading in shares and other securities, a feature now central to any mature securities market.

NSDL introduction finally ushers in paperless trading 

The electronic settlement of scrips in the National Securities Depository Ltd. which went live recently to commence this week (December 26, 1996)

Commencement of settlement at NSDL 

In 2000-01, Internet trading was started to augment convenience, transparency, and real-time trading. Internet-based trading was allowed through an order routing system for the execution of trades on stock exchanges.

Beginning of Internet trading, 2001

The Securities and Exchange Board of India (SEBI) has won the last legal battle over its decision to levy registration fees on stockbrokers on the basis of their turnover in the five-year period before the grant of registration. The Supreme Court dismissed the petition filed by the BSE Brokers' Forum challenging the fee and upheld SEBI's decision.

SEBI clears first ever exchange traded fund

The first ETF in India, Nifty BeES (Nifty Benchmark Exchange Traded Scheme) based on S&P CNX Nifty, was launched in January 2002.  Nifty BeES tracked the Nifty 50 index, allowing investors to buy and sell shares similar to stocks on the stock exchange. This innovation provided investors with a cost-effective and efficient way to diversify their portfolios and gain exposure to a broad market index. The introduction of ETFs marked a significant development in India's financial markets.

First ETF in India, 2002

The Securities and Exchange Board of India has standardised all forms of electronic transaction by introducing 'straight through processing' (STP) in the Indian Securities market. This is based on the recommendations made by a SEBI committee under the chairmanship of Shri R M Joshi, Executive Director, SEBI.

SEBI to Implement STP from December 2, 2002

Pursuant to the Foreign Exchange Regulation Act, 1973 (FERA), holdings of foreign firms in Indian companies were restricted to 40%. Any company with more than 40% foreign equity had to dilute it to comply with FERA. This was done to reduce foreign control and increase indigenous ownership of Indian industries. 

Foreign firms forced to cut Indian stakes, 1973

The Governing Board of the Stock Exchange, Bombay, decided to suspend admission to dealing of the securities of the 90 companies for three days from November 20 to November 22, 1990, for their failure to publish unaudited financial result for the half-year ended on March 31, 1990. This is required by Clause 41 of the Listing Agreement.

BSE suspends activities in 93 companies

India embarked on a transformative journey of economic liberalization. Faced with a severe balance of payments crisis, the government under Prime Minister Shri Narasimha Rao and Finance Minister Shri Manmohan Singh introduced a series of reforms, which included reducing trade barriers, opening up to foreign investment, and deregulating industries. 

Economic liberalization, 1991

The balance-of-payment crisis of 1991 brought to the fore the need for global foreign direct investment and portfolio flows. A high-level committee on balance of payments, under the chairmanship of C. Rangarajan recommended a shift towards non-debt-creating inflows of external finance. In a major step towards globalization, the government allowed foreign institutional investors (FIIs) to invest in listed companies on Indian stock exchanges under the guidelines issued on September 14, 1992. The Guidelines prescribed eligibility conditions for FII registration, such as track record, professional competence, financial soundness, and registration with a regulatory organization in their home country.

Permission for Foreign Institutional Investors (FIIs) to invest in the market, 1992

The Securities and Exchange Board of India (SEBI) dispatched about 2,000 broker registration certificate to stock exchange changes around the country.  SEBI decided to go ahead with registration on the basis of applications received, while the question of registration fee will be decided by an expert committee of four appointed under the stewardship of Mr. R S Bhatt, former Chairman of UTI.

SEBI begins registration of brokers

The Securities and Exchange Board of India superseded the governing board of the Pune Stock Exchange for six months and appointed an administrator in its place. This is the first time the regulator has taken such stringent action on any stock exchange in the country.

Pune bourse board superseded

The Securities Exchange Board of India has ordered compulsory settlement of traders in ten specified scrips in dematerialised form for institutional as well as other investor from January 4, 1999.

SEBI orders compulsory demat trading in 10 scrips

Disposing of the petition filed by three brokers accused in the market aberration case, the Bombay high court has rejected their plea for striking down the Securities and Exchange Board of India ban on their operations.

HC upholds SEBI ban on scam-accused brokers

The Securities and Exchange Board of India (SEBI) has issued show-case notices to the top brass of the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for their failure to detect and check price manipulation in three scripts, in its notice dated February 10, SEBI asked to explain lapses in detecting the abnormalities in price and volume in the scrips-Sterile Industries, BPL Ltd and Videocon Industries.

SC upholds SEBI fee on stockbrokers

The Government of India, decided to empower the stock market regulator, SEBI, by giving it more teeth for investigation, including power of search and seizure. The decision was made due the episodes of market misconduct which showed the limitations of SEBI Act.  

भारत सरकार ने शेयर बाजार के विनियामक सेबी को तहकीकात करने के साथ-साथ तलाशी और जब्ती करने की भी शक्ति प्रदान की ।  यह निर्णय इसलिए लिया गया क्योंकि सेबी अधिनियम के तहत सेबी को जो शक्तियाँ प्रदान की गई थीं वह काफी सीमित थीं जिसकी वजह से सेबी बाजार में बढ़ रहे धोखाधड़ी के मामलों पर रोक लगाने के संबंध में उचित कार्रवाई नहीं कर पा रहा था ।  

Govt gives SEBI an overhaul, more teeth

सरकार द्वारा सेबी को अधिक शक्तियाँ प्रदान करना

Starting July 2, 2001, all scripts that were being traded under the carry forward mechanism such as the automatic lending and borrowing mechanism (ALBM) of the National Stock Exchange and the borrowings and lending of securities system (BLESS) of the Bombay Stock Exchanges got replaced by Compulsory Rolling Settlement on all the bourses.

SEBI puts an end to badla

High-Frequency Trading (HFT) gained prominence in India's financial markets. HFT involves the use of advanced algorithms and lightning-fast execution to conduct large numbers of trades in milliseconds. It brought increased liquidity and efficiency but also raised concerns about market stability and fairness. HFT has since become a significant aspect of India's trading landscape, influencing market dynamics and regulatory discussions.

भारत के वित्तीय बाजारों में हाई-फ़्रीक्वेंसी ट्रेडिंग (एचएफटी) का चलन अब बहुत बढ़ गया है ।  हाई-फ्रीक्वेंसी ट्रेडिंग करने के लिए आधुनिक एल्गोरिद्म का इस्तेमाल किया जाता है और यहाँ ट्रेडिंग बहुत अधित तेजी से होती है ।  इस  तरह की ट्रेडिंग की वजह से बाजार और अधिक कारगर ढंग से काम करने लगा है और बाजार में लिक्विडिटी भी बढ़ी है, पर साथ ही इसकी वजह से बाजार की स्थिरता पर असर पड़ा है लेकिन साथ ही, इस बात पर भी प्रश्न खड़ा होने लगा है कि इससे बाजार सही तरीके से काम कर भी रहा है या नहीं ।  इस प्रकार हाई-फ्रीक्वेंसी ट्रेडिंग भारत में ट्रेडिंग के लिहाज से बहुत अहम हो चुकी है, जो न केवल बाजार के लिए नई-नई चुनौतियाँ खड़ी कर रही है बल्कि यह तो विनियमकों के बीच भी चर्चा का विषय बना हुई है ।

High-Frequency Trading (HFT) in India, 2005 onward

वर्ष 2005 के बाद भारत में की जाने वाली हाई-फ़्रीक्वेंसी ट्रेडिंग (अत्याधुनिक तकनीक का इस्तेमाल करके बड़े पैमाने पर की जाने वाली ट्रेडिंग)

On October 16, 2007, FIIs/ Sub-accounts were prohibited from issuing new Offshore Derivative Instruments (ODIs) with derivatives as underlying and existing positions with regard to such ODIs to be wound up over 18 months. The next day, markets breached the lower circuit at 10% when the NIFTY fell by 524 points and trading was halted for one hour. However, by the end of the day, the markets closed in green at 3081. 

SEBI's clampdown on participatory notes, 2007

With effect from July 1, 2013, CTT became applicable to the sale of all non-agricultural commodity futures at the same rate as on equity futures, that is at 0.01% of the price of the trade. For agricultural commodities, a distinction was made between futures on pure agricultural commodities, such as wheat, cotton and soybean, and futures on processed farm commodities, such as soy oil, guar gum and sugar. The former were exempted from CTT, while the latter were not. While its implementation aimed to curb speculation and increase government revenue, it also drew criticism for potentially affecting liquidity and trading volumes in the commodity derivatives markets.

Introduction of the Commodity Transaction Tax (CTT) on non-agricultural commodity futures, 2013

India introduced a significant legislative update with the enactment of the new Companies Act in 2013. This comprehensive law replaced the Companies Act of 1956 and introduced extensive reforms in corporate governance, accounting, and financial reporting. It aimed to align India's corporate regulations with international standards, enhance transparency, protect shareholder rights, and promote sustainable business practices. The Companies Act of 2013 represents a crucial milestone in India's corporate regulatory framework.

Companies Act, 2013

The “Make in India” campaign was kicked off in September 2014 to boost domestic manufacturing and attract foreign investments. The initiative featured investor-friendly policies, easier business regulations, and promotion of entrepreneurship. It signified a significant shift in India's economic policy towards self-reliance and drew attention from global businesses, signalling India's commitment to becoming a global manufacturing hub.

Launch of "Make in India" campaign, 2014

India implemented the Goods and Services Tax (GST), a landmark tax reform. GST replaced a complex web of indirect taxes with a unified taxation system. It streamlined taxation on goods and services, making it more efficient and transparent. This tax reform was aimed to promote ease of doing business, reduce tax evasion, and create a single national market. GST is considered one of the most significant economic reforms in India's recent history.

Goods and Services Act, 2017

On September 20, 2019, the government announced massive cuts in corporate tax rates, lowering the base rate to 22% from 30% and 15% from 25% for new manufacturing companies. It led to a surge in stock prices as companies' profitability increased due to reduced tax burdens. It also enhanced investor sentiment, attracted foreign investments, and stimulated economic growth, contributing to a bullish trend in the Indian stock market.

Corporate tax cut, 2019

Originally, a member of the Dutch East India Co. (VOC) board, Isaac Le Maire resigned in 1605 amidst controversy. Seeking revenge on the VOC, he initiated a short-selling campaign, aiming to lower the company's share price, which has been quoted as an early form of shareholder activism. Le Maire believed the VOC's decisions were detrimental to shareholders and employed shorting as a means to gain their attention. Eventually, the VOC persuaded the Dutch government to prohibit naked short selling, thwarting Le Maire's campaign.

The first short, 1605

In 1896, Sun Mill's shares were subjected to a notable cornering incident, orchestrated with the intervention of Mr. Chunilal Motilal, the then President of the Association. Share prices had soared to Rs. 620, but due to this manipulation, they were artificially lowered to Rs. 150. Eventually, they were settled at Rs. 500.

वर्ष 1896 में, सन मिल के अधिकतर शेयर कुछ व्यक्तियों ने खरीद लिए थे ।  इस प्रकरण में श्री चुन्नीलाल मोतीलाल की अहम भूमिका रही, जो उस समय असोसिएशन के प्रेजीडेंट थे ।  शेयरों की कीमत बढ़कर 620 रुपये तक चली गई थीं, लेकिन इस हेराफेरी के कारण, उन्हें कृत्रिम रूप से 150 रुपये तक कम कर दिया गया ।  अंततः, उनकी कीमत 500 रुपये तक चली गई ।

Cornering in shares of Sun Mill, 1896

सन मिल के शेयरों में गिरावट, 1896

The history of bank failures dates back to a few centuries but recorded ones are as far back as 17th century. In the early 20th century, the world's financial landscape underwent significant transformation. As nations braced themselves for the impending chaos of World War I, India's economy had to confront multiple challenges. One of the most significant economic events during this period was the series of domestic bank failures between 1913 and 1921, which left an indelible mark on Indian stock exchanges. A notable case during this period was that of a prominent member of the Native Share and Stock Brokers Association (earlier known as Bombay Stock Exchange and now BSE), Mr.  Jahangir Byramji, who had a substantial holding in Manekji Petit Mill shares, was adjudicated as an insolvent.

Impact of Bank Failures on Indian Stock Exchanges: A Case of ‘The Native Share and Stockbrokers’ Association’ (1913-1918)

On the eve of World War I, India witnessed a significant number of banking failures, primarily concentrated in the Punjab region. In the fiscal year 1913-1914, a staggering 54 banks were forced to shutter their operations, with a striking 28 of these closures occurring in Punjab and 11 in Bombay. This banking crisis had a direct, but varying impact on all major stock exchanges in Bombay, Calcutta and Ahmedabad.  The impact was deepest in Bombay, as many such banks in the city had strong connections with the stock market. 

Bank Failures, 1913-14

One of the first financial irregularities in the post-independence era, it was alleged that a Calcutta based individual named Haridas Mundhra fraudulently inflated stock prices. In June 1957, LIC invested Rs. 1.2 crore of its policy holder’s funds in six troubled companies in which Mundhra had a large holding. As much of LIC’s investment ended in losses and as the matter caught Parliamentary attention, government constituted a single member committee (Justice M C Chagla) to enquire into the matter.  The Report concluded the object of the impugned deal was to relieve Mundhra of his financial difficulties  rather than satisfy any public interest. Mundhra was found guilty and subsequently imprisoned for 22 years. The committee under Justice Vivian Bose was set up to initiate follow-up proceedings against finance inistry officials. The then Finance Minister Shri TT Krishnamachari resigned on February 18, 1958 following the indictment by the Chagla Commission.

Mundhra-LIC Issue, 1958

This was a massive financial scandal orchestrated by stockbroker of Bombay Stock Exchange, using forged bank receipts to inflate stock prices artificially. The incident exposed several inherent loopholes in India's financial system, leading to reforms in securities and banking regulations.

यह बॉम्बे स्टॉक एक्सचेंज के स्टॉक दलालों द्वारा किया गया एक बड़ा वित्तीय घोटाला था, जिसमें स्टॉक की कीमतों को कृत्रिम रूप से बढ़ाने के लिए नकली बैंक रसीदों का इस्तेमाल किया गया था । इस घटना के बाद भारत की वित्तीय व्यवस्था की कई कमियों का पता चला था, जिसके बाद प्रतिभूतियों (सिक्यूरिटीज़) से संबंधित विनियमों और बैंकिंग सिस्टम से संबंधित विनियमों में सुधार किए गए थे ।

Financial Scam of 1992

1992 का वित्तीय घोटाला

MS Shoes was established in Delhi in 1986 as an export house. The company raised substantial amounts through public issues but manipulated share prices and siphoned off funds. The allegation was that the company used its own funds to buy shares of its own company and rig prices. This fraudulent activity led to significant losses for investors. This market abberation highlighted regulatory gaps and loopholes, prompting SEBI to strengthen market surveillance and investor protection measures in the Indian securities market.

MS Shoes related issue, 1995

Golden Forest India Limited (GFIL) offered investors, most of them middle-class citizens, a promise of hefty returns on their investments in developing land and social forestry. However, after raising Rs. 1000 crore, the company collapsed and investors lost their money. After a long legal battle, the Supreme Court cleared the way for the reimbursement for 14 lakh investors.

Golden Forest Scam, 1997

The Vanishing Companies Scam refers to a series of fraudulent activities in the Indian stock market where several companies suddenly disappeared after raising funds from the public through Initial Public Offerings (IPOs). These companies, often referred to as "vanishing companies," would either shut down their operations or abscond, leaving investors in the dark. 

Vanishing Companies Scam, 1998

The Securities Exchange board of India (SEBI)'s  report on share price manipulation and the resultant payments crisis, has shown that securities scamester has managed a repeat performance in the stock market.

SEBI takes erstwhile Big Bull by the horns

According to Joint Parliament Committee Report (Para 2.15), Ketan Parekh who emerged as a key player in 2001 scam received large sums of money from the banks as well as from the Corporate bodies during the period when SENSEX was falling rapidly. This led the Committee to believe that there was a nexus between Ketan Parekh, banks and the corporate houses. In Para 2.20, the Committee further noted that "This Scam is basically the manipulation of the capital market to benefit market operators, brokers, corporate entities and their promoters and managements. Certain banks, notably private and co-operative banks, stock exchanges, overseas corporate bodies and financial institutions, were willing facilitators in this exercise. The scam lies not in the rise and fall of prices in the stock market but in large-scale manipulations like the diversion of funds, fraudulent use of bank funds, use of public funds by institutions like the Unit Trust of India (UTI), violation of risk norms on the stock exchanges and banks, and use of funds coming through overseas corporate bodies to transfer stock holdings and stock market profits out of the country. These activities went largely unnoticed. While the stock market was rising, there was an inadequate attempt to ensure that this was not due to manipulations and malpractices. In contrast, during the precipitous fall in March 2001, the regulators showed greater concern."

Stock Market Irregularities, 2001

The government announced that UTI would not be allowed to sell its equity holdings in blue-chip companies like ITC, which UTI was earlier forced to consider for raising funds to meet its redemption obligations. "There is no need for UTI to indulge in such 'asset bleeding' since the government is committed to meet all shortfalls in the redemption of its US-64 and other assured return schemes" - finance secretary S. Narayan.

Government stands committed to meeting shortfalls in UTI's US 64 redemption

SEBI’s investigation during 2005  revealed that certain entities had illegally obtained IPO shares reserved for retail applicants through thousands of Benaami demat accounts and transferred the shares to financiers. These financiers then sold on the first day of listing to make windfall gains from the price difference between the IPO price and the listing price. SEBI launched a probe into IPO allotments and, after identifying irregularities, passed an interim order restraining the involved entities from participating in future IPOs and directing depositories to freeze their dematerialized accounts.

Irregularities in the IPO issues, 2005

Satyam Computer Services’s revelations that the company's accounts were inflated during the trading hours on January 7, 2009 sent the market on a southward spiral. Satyam’s shares plunged 77.69% in a single trading session.  This shocking revelation of the accounting fraud, estimated at about Rs. 7000 crore, sent the BSE 30-share Sensex tumbling 7.25% on that day. This episode prompted regulatory reforms and increased scrutiny of corporate governance practices in India's business environment.

Satyam Computer Service's accounting fraud, 2009

UPA's win in the 15th Lok Sabha elections caused the only instance in history when the markets were halted due to a breach in the upper circuit. On May 18, 2009, markets were breached at 15%, after which there was a one hour halt. When markets resumed, the third threshold level was breached and the markets were halted for the rest of the day.

15th Lok Sabha election of 2009 triggers upper circuit breaker

The CNX NIFTY lost 900 points or 16% within two minutes on the morning of 5th October, 2012. The incident happened due to a fat finger trade wherein a broker entered an order by error. The market lost Rs. 3 lakh crore due to the erroneous sell order of Rs. 650 crore by the broker. The incident happened at 9:49 AM and the markets reached to a low of 4888.20 after previous day’s close of 5787.60. At the end of the day, the market closed at 5746.95, with a fall of 0.7%.

Market crash- fat finger trade, 2012

NSEL was embroiled in a financial scandal involving the alleged violation of regulatory norms and mismanagement. The crisis led to payment defaults, investor losses, and legal investigations. It exposed weaknesses in the regulation and oversight of spot commodity exchanges in the country, highlighting the need for stricter monitoring and reforms in the commodities market.

Payment crisis, National Spot Exchange  Limited, 2013

The IL&FS group defaulted on debt obligations, causing a crisis in India's financial markets. The default raised concerns about corporate governance, financial stability, and regulatory oversight. The government took over the company's management and initiated efforts to stabilize the financial system. The IL&FS scandal underscored the need for stronger regulatory supervision in India's financial sector.

IL&FS scandal, 2018

The Punjab National Bank, related financial irregularity involving a jeweller came to light during 2018. It is alleged that a jeweller defrauded Punjab National Bank (PNB) by obtaining fraudulent letters of undertaking (LoUs) and credit guarantees. This aberration amounted to over $2 billion and exposed weaknesses in the Indian banking system. It led to legal proceedings against those involved, increased scrutiny of banking practices, and a push for banking reforms in India.

PNB Issue, 2018

On March 24, 2020, the markets crashed due to COVID-19 and the imposition of a national lockdown. The SENSEX fell by 10% to 2991 points, and the NIFTY plunged 9.40% or 822 points, to 7923 points at 9:58 AM. That caused the markets to halt for 45 minutes. Trading resumed at 10:58 AM after 15 minutes' pre-open session. By the day's end, the stock markets witnessed the worst loss in history as the SENSEX closed at 25,981.24 with a decline of 3,934 points or 13.15% and the NIFTY closed at 7,610.25 with a decline of 1,135.20 points or 12.98%.

Lockdown due to COVID-19 and market crash, 2020

In ancient Japan, "rice futures" emerged as one of the earliest forms of derivatives trading. The rice futures allowed farmers and traders to hedge against price fluctuations in rice, a vital commodity. These contracts laid the foundation for modern derivatives markets by enabling participants to manage agricultural risks, serving as a precursor to the sophisticated financial instruments traded today.

Rice futures in Japan, 6th century BCE

In 1494, Luca Pacioli, renowned as the "Father of Accounting," made a pioneering contribution to the world of finance by publishing "Summa de Arithmetica, Geometria, Proportioni et Proportionalita," the first comprehensive book on double-entry bookkeeping. At the heart of his work was the pivotal principle that "debits must always equal credits." This revolutionary idea mandated that every financial transaction be meticulously recorded in a minimum of two distinct accounts, thereby guaranteeing precision and accountability in financial records. Pacioli's innovative approach laid the cornerstone for contemporary accounting practices, shaping the very foundation upon which modern financial record-keeping stands. His enduring legacy endorses the enduring significance of this fundamental concept, which continues to guide and underpin the discipline of accounting to this day.

Birth of double-entry bookkeeping, 1494

The Dutch East India Company (VOC) holds the distinction of being the pioneer in issuing publicly traded bonds and stocks. On November 7, 1623, it issued a ground breaking bond worth 2,400 florins. This innovative financial instrument not only funded the company's ambitious voyages but also served as a catalyst for attracting additional investments. The VOC's early foray into publicly traded bonds and stocks marked a watershed moment in the history of finance, laying the groundwork for modern capital markets and investment practices.

Origin of Bonds and Equities, 17th century

‘Early Trading Companies’ Two pioneering trading companies, the Dutch East India Company and the British East India Company, hold an esteemed place in the annals of financial history. In 1602, the Dutch East India Company, established with exclusive rights to East Indies trade, initiated a momentous event—the world's first Initial Public Offering (IPO). This ground breaking offering heralded the birth of stock exchange trading, setting in motion a transformation in global commerce and investment. The British East India Company, founded on December 31, 1600, played a monumental role in the history of trade. Its joint stock shares were actively traded in London, signifying a burgeoning capital market. Notably, this enterprise consistently paid dividends to its investors, exemplifying reliability over centuries until its dissolution in 1874. In parallel, early debt instruments issued by the English East India Company, a predecessor to its British counterpart, demonstrated ingenuity in raising capital for ambitious ventures. These innovations in finance pushed the boundaries of what was conceivable in the realm of commerce. Together, these historical facts epitomize the genesis of modern financial systems. From the inaugural Dutch IPO, symbolizing the birth of stock exchange trading, to the British East India Company's unwavering dividends and inventive debt instruments, these companies laid the foundation for the contemporary financial markets we know today.

Dutch East India Company Bond, dated 7th November, 1623 

Dutch broker Abraham van Ketwich introduced what many believe to be the first "mutual fund". It was called "Eendragt Maakt Magt," meaning "Unity Creates Strength." This initiative followed the 1772 financial crisis, where Dutch banks faced near-collapse due to heavy investments in plummeting British East India Company stock. This crisis underscored the importance of diversification. Van Ketwich's fund featured 50 equally weighted bonds spanning 10 diverse sectors, marking a pivotal step in investment strategy innovation.

First mutual fund, 1774

Upon assuming the role of the inaugural Treasury Secretary in 1789, Alexander Hamilton confronted severe financial challenges in the fledgling United States. Hamilton authored the "Report on a National Bank" in 1790, advocating for a national bank to stabilize the economy. After contentious deliberation, Congress greenlit the "Bank of the United States" (BUS) in 1791, with a $10 million capitalization, comprising 80% private ownership and 20% government ownership. Remarkably, the IPO took place on July 4, 1791.

First bank in the US, 1791

Rain gambling, or "Barsat ka Satta", originated in Rajasthan, where the Marwari community, facing perennial water scarcity, speculated on monsoon patterns. It spread to Calcutta (now known as Kolkata) in the 1800s, faced British opposition in Bombay (now known as Mumbai), and led to a court victory for Marwari rain gamblers. Despite protests, legislative amendments caused its decline and eventual ban in Calcutta by 1900. This unique chapter in gambling history reflects human adaptability amid monsoon unpredictability, serving as a nostalgic reminder of India's early weather derivatives.

Monsoon Bets: Unraveling the History of Rain Gambling in India

The British East India Company introduced the "Rupee" as the official currency of British-controlled territories in India. This marked a significant departure from the diverse regional currencies previously in use. The Rupee became the standard currency unit, and silver coins known as "Company Rupees" were issued. This move played a crucial role in the company's economic control over India during the colonial period.

The British East India Company introduced the "Rupee" as the official currency, 1825 

The Jute industry in India experienced a significant boost during the American Civil War (1861-1865) and the subsequent Cotton Share Mania. As the war disrupted cotton supplies from America, there was a surge in demand for alternative fibers, including jute, for use in textiles and packaging materials. This prompted increased cultivation and processing of jute in India, particularly in Bengal. Jute shares became attractive investments, similar to the earlier cotton shares, as the industry thrived. After end of the American Civil War, the jute industry faced a collapse as cotton supplies from America resumed post-Civil War, diminishing global demand for jute products.

Boom and bust of the jute industry, 1860s

The American Civil War disrupted global cotton supply. It caused shortages of cotton which led to huge exports of cotton from India to Britain, boosting the economy. The overall prosperity surrounding such exports led to the Share Mania of 1861-65

American Civil War, 1861-65

The remarkable ascent of the Indian jute industry in Bengal during the 1880s was closely tied to the decline of the jute industry in Dundee, Scotland. As the Dundee jute industry faced challenges, including rising production costs and labor disputes, it gradually lost its competitive edge. This downturn in Dundee's jute production created a void in the global market, which the Indian jute industry was well-positioned to fill. Bengal had abundant jute cultivation, cost-effective labor, and an increasingly efficient manufacturing sector, all of which contributed to its meteoric rise as the new hub of jute production.

Fall of Dundee and rise of Bengal jute industry, 1880s

World War I (1914-1918) significantly impacted the Indian economy and stock markets, with the British Empire's resources and labor force playing a significant role. The war led to a surplus in civilian goods production, which India capitalized on, leading to a boom in sectors like cotton, jute, steel, sugar, and paper. This economic prosperity led to a revolution in the stock market, with joint-stock companies establishing, public participation increasing, and liquid capital increasing. The emergence of other stock exchanges in India, such as the Gujarat Share and Stock Exchange, further reflected the growing public interest in stocks. However, the economic impact was short-lived, as European industries shifted their focus to peacetime production, straining the Indian economy.

World War I (1914-1918) and its impact on the stock market, 1914

The Great Depression was the deepest and longest economic downturn of the 20th century that affected most of the major economies of the world. India, being a colonial export-oriented economy, was also adversely impacted by the Great Depression, primarily due to a crash in commodity prices in domestic and international markets. Further, stocks plummeted on major Indian exchanges, taking cues from global turmoil. However, by 1932, normalcy was restored in international trade and manufacturing activity and there was a sizable recovery in India as well. The article delves into the events leading to the Wall Street crash of 1929, the subsequent global economic depression, and the impact of these events on the Indian economy.