In the last 20 years, the city saw the meteoric rise and fall of Cochin Stock Exchange
Twenty years ago, Kochi’s stock market sprang up along with large textile retail outlets, the local dotcom companies and the first of a series of proper super markets in the State as a cultural icon. The city continues to hold on to its position as the centre of equity culture despite the fact that dotcom companies had a fleeting fortune and Cochin Stock Exchange will soon be closed down as part of national policy on trading platforms.
There is a story that still does the rounds of Kochi’s financial circles of a distant morning in the early 90s when a group of people, described in media reports as Naxalites, surrounded Cochin Stock Exchange. They demanded its closure, alleging that a lot of money was being siphoned off from Kerala to business centres like Mumbai through the stock exchange.
An apocryphal version of the story is that the so-called Naxalite action was organized by insiders to draw attention to the working of the stock exchange, at that time a phenomenon quite new and almost magical to the people in Kerala.
But it is a sweet irony that things changed for ever from there. That was the last we heard of any opposition to capitalism’s stamp of authenticity over rebellious Kerala. The event, 20 years ago, revolutionised how people in the State, risk-averse and perennially driven by agricultural angst, looked at the growing glamour of stock market.
Even today less than two per cent of the State’s population participate in equity market. It all began when rubber, spice and coconut farmers, rich fishermen, the cream of small businesses houses and the more adventurous among the middle-class looked forward to emerge richer out of the doors of Cochin stock exchange, incorporated in 1978 and functioning out of a small room on Broadway before shifting to a larger premise on Veekshanam Road two years later. In the mid nineties, the exchange moved out to the current building in Kaloor.
T. S. Anantharaman, twice vice-president of Cochin Stock Exchange and one of the brains behind its emergence as a big player, recalled how he was deputed to pacify the ‘Naxalites’ and convince them that a stock exchange did not work the way they believed it did.
Eventually he succeeded in turning them away, helping the city emerge as a major centre for trading in stocks post Harshad Mehta scandal. Daily volumes rose up to Rs. 40 crore a day with all A-group scrips being traded here. Membership soon went up to 508 and the number of sub-brokers rose to 2,500.
A broking firm Geojit (Geo of C. J. George and Jit of Ranajit Kanjilal), emerged on the scene along with entities like Peninsular Capital and Mayura Securities as harbingers of a new era which would take advantage of the first waves of economic liberalization in the country and embrace technology that virtually did away with the time-space gap in transactions.
The rest, as they say, is history. In 2011-12, Securities and Exchange Board of India (Sebi) ranked Kochi as the biggest centre — after Mumbai, Delhi and Kolkata — in terms of the volume of shares changing hands in the country and Kerala as the only state in the country with a shareholder under every single Postal Index Number.
This has a lot to do with Geojit BNP Paribas, a brokerage here that took Kochi’s fame to the national stage, securing business across the country and processing it through its servers in the city. But the fact is that Kochi is today the hub of the State’s equity culture, a position it achieved through 20 years of growth, leveraged by new technologies.
Mr. Anantharaman said Kochi Stock Exchange’s growth was rapid. He attributed the phenomenon to the eagerness shown by brokers to adopt change. “We realized that the future lay in the new technology,” he said.
“There were more changes in Indian capital market between 1994 and 2002 than in 100 years,” remembers chairman and managing director of Geojit BNP Paribas C. J. George, recalling the days when the seeds of Kochi’s emergence on the capital market scene were sown. Soon, Mr. George’s partner Ranajit Kanjilal divested his shares, leaving Mr. George to don the mantle of most successful player in the market.
He said Kochi emerged on top of centres like Chennai, Bangalore and Hyderabad even in those years, thanks to the ability of players here to take to the new technology.
Mr. Anantharaman said Kochi was the first stock exchange in the country to switch to the electronic mode from the outcry system, the breaking away proving quite difficult in the initial days.
Mr. George recalled how a broker, using the computer for the first time to place buy orders, mistakenly punched in 10,000 shares instead of the actual 1,000 he wanted. Panic-stricken, the broker tried to stop the transaction by switching off the computer. “We had to educate both our clients and our employees,” he said describing how people were initially uncertain and, sometimes fearful.
Oommen Isen, president of the Cochin Stock Exchange (1996-98), said Kochi’s technology transition was quick and dramatic. “The new technology gave us a national platform,” he said about the constitution of the National Stock Exchange, which became one of the two platforms for market players.