Hedging Efficiency of Stock Futures in the Indian Market

Abstract

“Derivatives” trading have a long presence in the Indian market. It has been introduced on the Bombay Stock Exchange and the National Stock Exchange in June 2000 and are been traded successfully with the involvement in the trading by the investors, brokers and corporate houses. “Derivatives” trading has become popular in the Indian markets and this is evident from the volume of trading done in this segment as compared to that in the cash market. It has gained popularity as a powerful tool for the management of Risk and a tool for hedging the standing in the market. Hence, requiring a need to understand the extent to which it can help an investor manage his portfolio risk through Hedging.

In this study, an attempt has been made to analyze the theoretical framework of the Stock Futures in the Indian market as well as its applicability to hedge the risk in the market while understanding the pattern of usage of these derivatives in the securities by the investors and the brokers.

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Keywords: Derivatives, Futures, National Stock Exchange, NSE, Options
Categories: January 2014