Running Behind Lakshmi: The Search for Wealth in India’s Stock Market

India is home to one of the largest stock markets in the world: the Bombay Stock Exchange, which has a market capitalization of roughly $5 trillion. Rustomjee’s monumental book is the first-ever analytical history of the Bombay exchange and India’s other stock markets. Rustomjee moves from their modest nineteenth-century origins, through their spectacular rise in the 1990s, and on to their even higher valuation today. He argues that India’s economic liberalization, in 1991, prompted the initial, stratospheric growth. Later reforms and new technologies expanded the market further by making it easier for ordinary people to invest. Rustomjee’s book is a master class in political economy, tracing how key actors—such as the Reserve Bank of India (the country’s central bank), the Securities and Exchange Board, corporations, foreign institutional investors, and regular traders—created a stock market whose growth is now independent of the wider Indian economy. Indian investment behavior, Rustomjee argues, is a living refutation of the efficient market hypothesis, or the idea that stock prices faithfully reflect all available information about the underlying asset. He shows, for example, how periodic scams have not dented the markets’ reach and resilience. In fact, they have increased their valuations.