Which is the capital of our State?
What is the capital of our State?
I wanted to know which one is the correct form amongst the above
two questions and why?
Both the sentences are correct. WHICH and WHAT are two different question words - with two different meanings. WHICH is a word that refers 'that there are few/some/many' - so among all - WHICH one?
So when you ask - Which is the capital of our state? - the listener understands that 'there are many cities in our states'; among those particularly 'which one' is the capital?
In a multiple choice question there might be name of some cities and it would be asked in this way: "Which is the capital of our state?"
WHAT is a word that directly asks information; such as: What's your name? What's your address? What's your hobby? .....and so on.
So, What is the capital of our state? - is just such a way of asking.