The stock market is a part of the financial market where shares and other securities are bought and sold. It includes a mechanism for bringing together buyers and sellers so that orders can be executed. In India, the Bombay Stock Exchange & National Stock Exchange have been designated as primary stock exchanges for bringing the transparent trading platform to investors where stocks, bonds, derivatives, etc. can be traded.
History of Equity Market:
The history of the equity market is as old as trading itself. In this article, we will discuss the share market in India and how it has evolved from a small village to a megacity today.
In ancient times, the people used to transact business by barter system or exchange of goods and services directly. Later on, they started using coins. The Indian economy also followed the same pattern during most of its history.
However, there are some references in this regard that can be traced back to 1000 BC when the concept of the share market emerged. Many people were engaged in agriculture activities and there was a need for money to pay taxes etc. With no banking system or other sources for borrowing money, people started using the concept of “Partnership” where many persons jointly used to undertake agriculture activities.
One person had to provide his labor while others had to contribute cash, bullocks, etc. Each person was allotted some agricultural land and each one of them was entitled to share produce according to his contribution at the end of the agricultural period. This practice gave birth to the share market. Share means apart and market means buying & selling, therefore it is an agreement for sharing produce between partners.
It was also called a “Partnership deed”. According to the ancient law, the maximum number of partners was fixed at 32; this limit was fixed because the biggest holding in a village was 32. The market for crops was also 32.
Later on, this concept became popular and it used to be enforced by law in every town. This social structure led to a revolution in the agriculture sector which laid a solid foundation for the birth of the share market in India.
The agricultural sector provided the primary source of income in ancient times. The concept of a share market developed on the foundation of the barter system which was thriving in villages, towns, etc. at that time. As India became urbanized, this method lost its significance but the concept of sharing did get transformed into a modern-day mechanism for raising funds from capital markets, Share Market!