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Siddhant- A Journal of Decision Making
Year : 2011, Volume : 11, Issue : 4
First page : ( 345) Last page : ( 359)
Print ISSN : 2231-0649. Online ISSN : 2231-0657.

Growth of derivatives in the Indian stock market: A case analysis of NSE

Majhi Priti Ranjan, Professor in Management Studies

Department of Operations and Decisions Science, Regional College of Management Autonomous, Chokadolavihar, Chandrasekharpur, Bhubaneswar-751023, Odisha, India, drpritiranjan@gmail.com

Online published on 25 May, 2012.

Abstract

Due to the increased effects of globalisation, the Indian financial stock Market is being increasingly exposed to global market factors and by rising levels of complexity of risks.

The last two decades have witnessed many-fold increase in the volume of international trade and business due to the wave of globalisation and liberalisation sweeping across the world. This has led to rapid and unpredictable variations in financial assets prices, interest rates and exchange rates, and subsequently, exposing the corporate world to an unwieldy financial risk. In India, the emergence and growth of derivatives market is relatively a recent phenomenon. Since its inception in June 2000, derivatives market has exhibited exponential growth both in terms of volume and number of traded contracts. The market turnover has grown from Rs.2365 crore in 2000–2001 to Rs. 29248221.09 crore in 2010–2011. Within a short span of 11 years, derivatives trading in India has surpassed cash segment in terms of turnover and number of traded contracts.

The present paper provides historical background of stock market in India and also analyses the growth pattern of NSE. The study covers the period of eleven years spread over from 2000–10 to 2010–11. It has been found that all the segments of NSE have registered splendid growth in terms of turnover. The derivatives segment of NSE has made it one of the largest stock exchanges in the world. The present study encompasses in its scope an analysis of historical roots of derivative trading, types of derivative products, regulation and policy developments, trend and growth future prospects and challenges of derivative market in India.

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Keywords

Forward, Futures, Options, Financial Derivatives, NSE Segment, Security.

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