Like any market a stock market is a place where buyers and sellers get together to buy and sell shares. As we know, shares are part ownership of a company. So if you hold shares of Reliance Industries, you are actually a part owner of Reliance Industries Ltd. Today shares do not have to be held in physical form. They can be held in demat form, which is a lot simpler and less risky.

Today there are 2 principal stock markets in India viz. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Previously, there used to be a large number of regional stock exchanges in places like Ahmadabad, Vadodara, Kochi, Kolkata, Magadh, and Delhi etc. So why do these exchanges not exist now?

Till 1995, Indian stock exchanges operated on the open cry system (OCS). Under the OCS, the order matching between the buyers and the sellers would happen on a manual basis. Thus there were jobbers who would provide liquidity in specific stocks and they would be working under a broker. Buy and sell offers would be shouted in the ring and deals closed. All this changed after 1994, when NSE introduced computer based trading for the first time. BSE followed in 1995 and people could place orders from anywhere in India on these terminals through VSAT links. As BSE and NSE grew in size and volumes, the small exchanges began to lose business and eventually had to shut down.