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Capital Market & Stock Exchange

RBI Grade B · Banking Awareness

Also prepare for:IBPS PO IBPS Clerk SBI PO SBI Clerk

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Core Concept

Read this first — the foundation of the topic

→There are two parts

• Primary Market — New shares/bonds are sold for the first time (IPO happens here). • Secondary Market — Already issued shares are bought and sold among investors (Stock Exchange operates here). ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ KEY RULES & PROPERTIES ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ • Capital Market deals in long-term instruments: Equity Shares, Preference Shares, Debentures, Bonds. • Money Market deals in short-term instruments (less than 1 year). Do not mix these two. • SEBI (Securities and Exchange Board of India) regulates the capital market. Established in 1988, given statutory powers in 1992. • BSE (Bombay Stock Exchange) — established in 1875 — is Asia's oldest stock exchange. Index is called SENSEX (tracks 30 companies). • NSE (National Stock Exchange) — established in 1992.

Index is called NIFTY 50 (tracks 50 companies). • SENSEX base year is 1978-79, base value is 100. • NIFTY base year is November 3, 1995, base value is 1000. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ FORMULA BLOCK ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ SENSEX = (Sum of Market Cap of 30 companies / Base Market Cap) x 100 Market Capitalisation = Current Share Price x Total Number of Shares ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ EXAM PATTERNS ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ IBPS PO frequently asks: 1. Which body regulates capital markets? (Answer: SEBI) 2. Full form and establishment year of BSE/NSE 3. Difference between Primary and Secondary markets 4.

Which index tracks how many companies? 5. Base year of SENSEX or NIFTY ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ SHORTCUT / TRICK ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ TRICK 1 — B-S-N-N Memory Code: • BSE → Sensex → 30 companies → Base 100 • NSE → Nifty → 50 companies → Base 1000 Remember: NSE has MORE companies and HIGHER base value

⚡TRICK 2 — Market Type by Time

1

IPO = Initial Public Offering = company sells shares FOR THE FIRST TIME.

2

First-time issue = Primary Market. This is where new securities are created.

3

After IPO, shares are listed on BSE. Investors now buy/sell among themselves.

4

Trading among investors on BSE = Secondary Market

→Answer

IPO → Primary Market. Trading on BSE → Secondary Market. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ COMMON MISTAKE ━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Students confuse BSE with NSE numbers

💡Remember

BSE is OLDER (1875) but NSE's Nifty tracks MORE stocks (50). Also, many students think SEBI was established in 1992 — but it was SET UP in 1988 and got statutory powers (legal authority) in 1992 via the SEBI Act.

🔑 Key Points

Capital Market deals in long-term funds (more than 1 year) — instruments include shares, bonds, and debentures.
Primary Market = new securities issued for first time (IPO); Secondary Market = existing securities traded between investors.
SEBI regulates India's capital market — established 1988, statutory powers granted via SEBI Act 1992.
BSE (Bombay Stock Exchange) was established in 1875 — Asia's oldest stock exchange — index is SENSEX.
SENSEX tracks 30 companies; base year is 1978-79; base value is 100.
NSE (National Stock Exchange) was established in 1992 — index is NIFTY 50, tracks 50 companies; base value is 1000.
Market Capitalisation Formula: Current Share Price x Total Number of Shares Outstanding.
Money Market = short-term (less than 1 year); Capital Market = long-term (more than 1 year) — never mix these.

📌 Exam Facts

BSE was established in 1875 and is the oldest stock exchange in Asia.
NSE was established in 1992 and its benchmark index NIFTY 50 tracks 50 companies.
SEBI was established in 1988 but received statutory (legal) powers only in 1992 through the SEBI Act, 1992.
SENSEX base year is 1978-79 with a base value of 100.
NIFTY 50 base date is November 3, 1995 with a base value of 1000.
Full form of SENSEX is Sensitive Index; full form of NIFTY is National Stock Exchange Fifty.
IPO stands for Initial Public Offering and it occurs in the Primary Market.
SEBI headquarters is located in Mumbai, Maharashtra.

🚀 60-Second Revision

Remember: Capital Market = long-term (>1 year); Money Market = short-term (<1 year). This difference is a direct MCQ trap.
Remember: BSE = 1875 (oldest in Asia) → SENSEX → 30 stocks → base value 100 (base year 1978-79).
Remember: NSE = 1992 → NIFTY 50 → 50 stocks → base value 1000 (base date Nov 3, 1995).
Trap: SEBI was SET UP in 1988 but got legal/statutory powers in 1992 — exams ask both years separately.
Formula: Market Cap = Share Price x Number of Shares — used to calculate index weight of a company.
Remember: Primary Market = first-time issue (IPO/FPO); Secondary Market = resale of existing shares on stock exchanges.
Trick: NSE has MORE companies (50) and HIGHER base value (1000) than BSE (30 companies, base 100).

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