There is no single Indian stock market, but rather two main markets that operate out of a major financial hub and allow for investment in its biggest companies. This is an often overlooked but hugely powerful and incredibly rich market. It’s one that deserves more attention than it gets.
We’ll cover all of the basics from the perspective of an outsider looking in, whether you want to trade on the Indian stock market or you are just looking to brush up on your knowledge of it.
Indian Stock Market
Many assume that the Indian stock market is small and insignificant. The truth is, there are some very big exchanges in this country, much bigger than many other highly developed nations in fact. India is a country full of millionaires and billionaires, of big businesses and business-owners, and that has led to a huge surge in the financial sector.
The main markets in this country are:
- Bombay Stock Exchange: This is the biggest stock exchange in India, the one where many top companies trade. There is a market cap of over $1,600 billion, which means it is bigger than the Australian stock exchange and the Six Swiss Exchange.
- National Stock Exchange of India: This is the one that many might be thinking of when they use the words “Indian stock market”. But it is actually the second biggest, albeit with a market cap that is only fractionally less than the Bombay Stock Exchange.
Both of these Indian stock markets are based in the city of Mumbai, which is the financial center of this rapidly developing nation.
Indian Stock Markets in Mumbai
Mumbai is where it’s if you are a banker, a stockbroker or a day-trader in India. This is where all of the action takes place, both offline and online. Like most of the country it is a region that is polarized, with some very rich and some very poor people often living side by side. This is a situation that isn’t unique to India and one that you can even get in parts of the US and China, but the extremes of those rich and those poor, as well as the gulf between the two, seems to be a rather uniquely Indian thing.
Mumbai is the richest city in India and it has also been listed as an Alpha World City, which basically means that it is a city of high importance to the global economy. What happens here does not only effect the Indian stock market and the Indian economy, but also the economies and the markets of the world. Other cities on this list include Los Angeles, Moscow and Milan.
There are more millionaires and billionaires in Mumbai than anywhere else in India and it is also home to many rich companies, top sports teams and Bollywood, which is one of the biggest and most well known film industries in the world.
Simply put, this is the perfect place for Indian stock markets. It is the pulsating heart of the Indian economy and the many towns and cities that surround it, as well as the many roads that lead away from it, are the arteries and veins, moving money, success and opportunities into and away from the city.
How to Invest in the Indian Stock Market
As discussed on our Online Trading page, it’s not always easy to invest in a stock market if you don’t live in the country which that stock market operates in. If you reside in the UK, for instance, then you can freely and easily invest in the London Stock Exchange. You can signup to sites like Halifax Share Trading and you can be trading in stocks like ABF within matter of minutes.
If you want to trade on the New York Stock Exchange, it’s a different matter. You might think that it would be just as easy, on account of the close relationship that the US has with the UK, and the fact that their economies are so closely tied, but that’s not the case. You need to undergo verification checks and you need to wait days, if not weeks.
Something similar is in place with regards to trading on the Indian stock market. It can actually be harder for traders from those countries to trade here simply because not many trading platforms offer this service. They all tend to focus on the biggest stocks and the most well known exchanges, which often leaves the Indian stock exchanges out of the equation.
Make no mistake about it, this is a big market. We covered that above. But when you compare it to the biggest, it just doesn’t come close, and that’s why it’s so hard to invest.
It may be a different story if you reside in Asia, especially if you live in Bangladesh and Pakistan, where you can trade on the Karachi Stock Exchange and the Dhaka Stock Exchange. But in Europe and America…not so much.
Indian Stock Market Controversies
The Indian stock market has been a bit of a haven for fraud lawyers inside and outside of the country. Stock markets generally court controversy, but there is something about the stock exchanges in this country that seem to attract it like no other. There have been many controversies on the Indian stock market over the years, including:
- Satyam Scam: In 2009 it was discovered that Ramalinga Raju had been cooking the books for close to 6 years. He fixed the books in his software company to report sales that weren’t happening and to make everything look much more impressive than it was, thus artificially inflating the value of his company.
- Saradha Scam: In 2013, Sudipta Sen was caught running multiple investing schemes, collecting large sums of money from unwitting investors who would never see a penny in return.
- Harshad Mehta: Harshad was a stock broker who was known to run a number of investment scams on the Bombay Stock Exchange. He took advantage of loopholes in the banking system that allowed him to scam a small fortune over the course of several years. He was sentenced to 9 years in jail and died behind bars in 2001.