UPSC Prelims 2005 Q73: Indian Economy – Financial Markets & Capital Markets
Consider the following statements :
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
Answer: (a) 2 only
Explanation
Sensex and stock exchanges
| Statement | Verdict |
|---|---|
| 1. Sensex based on 50 stocks | False: Sensex has 30 stocks (Nifty has 50) |
| 2. All Sensex stocks given proportional weightage | True — weights follow market capitalisation |
| 3. NYSE is the oldest stock exchange | False: the Amsterdam exchange (1602) is older |
Only statement 2 is correct.
Answer: (a) 2 only.
Why each option is right or wrong
- (a) CORRECT. Only statement 2 is correct.
- (b) Incorrect. Statements 1 and 3 are false.
- (c) Incorrect. Statement 3 is false.
- (d) Incorrect. Statement 2 is correct.
Key point
Sensex: 30 stocks, BSE. Nifty: 50 stocks, NSE.
Remember
Sensex has 30 stocks, not 50.
Common mistakes
- Mixing Sensex (30 stocks) with Nifty (50 stocks).
- Thinking the New York exchange is the oldest in the world.
- Rejecting statement 2 as too vague to be true.
Exam tip
Sensex = 30 BSE stocks; Nifty = 50 NSE stocks.
Sources
- BSE — Sensex methodology
- National Stock Exchange of India — NIFTY 50 Index Methodology