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1. Introduction The Indian financial system is a complex, interconnected framework that plays a central role in mobilizing savings, supporting economic activities, and promoting capital formation. It consists of financial institutions , financial markets , financial instruments , and financial infrastructure . Over time, the structure has evolved significantly—from a highly regulated, government-directed system to a more market-oriented, technology-driven, resilient financial ecosystem. This article provides a professional academic analysis of the Indian financial system and the capital market, tracing its evolution, reforms, institutional components, major issues, and growth trends. The explanation is designed for students of commerce, management, economics , and for academic blogs or reference material. 2. Structure of the Indian Financial System The Indian financial system can be broadly classified into: Component Description Financial Institutions Banks, NBFCs, AIFIs, insura...

The BSE Sensex , also known as the Sensitive Index , is one of the most widely recognized indicators of stock market performance in India. Introduced by the Bombay Stock Exchange (BSE) in 1986, the Sensex tracks the performance of 30 large, financially strong, and established companies from various sectors of the Indian economy. These companies collectively provide a representative picture of overall market conditions. Today, Sensex is calculated using the free-float market capitalization method—an internationally accepted methodology used by leading global index providers such as MSCI, FTSE, STOXX, S&P, and Dow Jones . This blog post provides a deep, clear, and structured explanation of how the Sensex is constructed, how free-float market capitalization works, and how index values are mathematically determined. 1. What Is Free-Float Market Capitalization? Free-float market capitalization is a method of calculating a company’s market value based only on the shares that ar...

1. Basics: What the Market Is and Who’s in It Stock exchange / Bourse A stock exchange (or bourse) is a marketplace where shares and other securities are bought and sold. Think Bombay Stock Exchange (BSE) or National Stock Exchange (NSE) — places where trades are matched and prices discovered. Securities / Shares / Equities Securities are financial instruments that represent value — equities (shares), bonds, debentures, etc. A share (or equity) is a unit of ownership in a company; shareholders share in profits (via dividends) and capital gains if the share price rises. Primary market vs Secondary market The primary market is where companies issue new shares (e.g., an IPO). The secondary market is where investors buy and sell existing, listed shares through exchanges. IPO (Initial Public Offering) When a private company offers shares to the public for the first time. Investors apply via the prospectus , and shares may be oversubscribed if demand exceeds supply. Issuer, under...