This is the second such acquisition by an international stock market in the Indian stock market. BSE is planning to sell a further 21 per cent to private equity funds this year.

The BSE is planning to sell a 26 per cent stake to strategic investors, with another 25 per cent to be offloaded through an initial public offer later.

The deal, which values the BSE at $854 million, follows the acquisition of a 5 per cent stake in January by the NYSE Group in India's biggest bourse, the National Stock Exchange (NSE), for $115 million.

The two bourses would "explore ways of strengthening their collective competencies across a broad spectrum of business areas", Deutsche Boerse said in a statement.

"The strategic partnership with BSE is a very important step for us towards expanding Deutsche Boerse's activities in Asia," added Deutsche Boerse's chief executive, Reto Francioni.

The acquisition will give Deutsche Boerse a foothold in one of the world's fastest growing capital markets, while the BSE will gain access to the German bourse's technological expertise and access to western markets.

The government recently issued new rules limiting ownership of exchanges to 5 per cent for any individual foreign entity.

Meanwhile, the Singapore Exchange has said that it is still in talks to pick up a 5 per cent stake in the BSE.

"We are still in dialogue with the BSE. We can't comment further," a spokeswoman for the Singapore bourse said.

The BSE, a former brokers club and one of the region's oldest stock exchanges, has been demutualised since the late 1990s and is currently adopting a corporate structure.