UPSC Economy Study Materials


Stock Exchanges - Ekam IAS


In India, there are small and big stock exchanges. The most prominent exchanges are National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).


It was established in 1993 on the recommendation of Pherwani Committee. Industrial Development Bank of India (IDBI) is the main promoter of this exchange. Other leading Financial Institution are also promoters of it along with IDBI.


It was established in 1887. It is Asia’s Oldest Stock Exchange. It was known as “The Native Share and Stock Brokers Association’. It was owned by stock brokers. Now it is demutualised. Demutualised means the stock brokers owned organization made public owned organization. The shares in the hands of brokers were transferred to public. This process is called demutualization.


Like wholesale price index which measures the rise/fall in the price of commodities, there are share price indices. The most prominent indices in India are Sensex, Nifty and Nifty Junior.

Sensex stands for sensitive index. This is an index of Bombay stock exchange. This measures the price movement of top 30 company shares. The top 30 companies are called Blue chip companies.

Nifty stands for National Index for fifty. This and Nifty Junior are indices of National stock exchange. NIFTY measures price movement of top fifty companies. Nifty Junior is an index of next 50 top companies.

The top companies are selected on the basis of total value of all shares that are traded in the stock exchange. The value of all shares = Price of one share x Number of shares traded. This value is called free float market capitalization. The value of all {both trade and non-traded (the shares that are kept for a long time)} shares is called market capitalization.

Previous Year’s Questions – Prelims

Q1. Consider the following statements: (2005)

  1. Sensex is based on 50 of the most important stocks available on the Bombay Stock Exchange (BSE).
  2. For calculating the Sensex, all the Sensex stocks are assigned proportional weightage.
  3. New York Stock Exchange is the oldest stock exchange in the world.

Which of the statements given above is/are correct?
(a) 2 only                 (b) 1 and 3          (c) 2 and 3          (d) None

Q2. Among the following major stock exchanges of India, the exchange which recorded highest turnover during the year 2000-01 is  (2002)

(a) Bombay Stock Exchange

(b) Calcutta Stock Exchange

(c) Delhi Stock Exchange

(d) National Stock Exchange


Q3. A rise in ‘SENSEX’ means (2000)

(a) A rise in prices of shares of all companies registered with Bombay Stock Exchange

(b) A rise in prices of shares of all companies registered with National Stock Exchange

(c) An overall rise in prices of share of group of companies registered with Bombay Stock Exchange

(d) A rise in prices of shares of all companies belonging to a group of companies registered with Bombay Stock Exchange


Q4. Hawala transactions relate to payments (1996)

(a) received in rupees against overseas currencies and vice versa without going through the official channels

(b) received for sale/transfer of shares without going through the established stock exchanges

(c) received as commission for services rendered to overseas investors/ buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment.

(d) made to political parties or to individuals for meeting election expenses.


Q5. To Prevent recurrence of scams in India Capital Market, the Government of India has assigned regulatory powers to (1995)

(a) SEBI

(b) RBI

(c) SBI


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