Price Discovery and Volatility in NSE | Original Article

ABSTRACT:

Derivatives markets in India were introduce about seven years ago and futures Options markets have become an extremely important trading instrument throughout world tlnancial sectors. In our country. India, a Futures Options Market is playing very important role for various category of investor’s right from retail to institutional investors. In this thesis I discuss the role of derivatives markets in terms of price discovery and volatility over a cash market. Paper outlines legal, financial. And structural framework of Index futures contract trading on the National Stock Exchange of India (NSE). I offer a summary for price discovery and volatility in NSE CNX Nifty Index and Nifty Index futures markets. Any study on Index futures trading must include a discussion of the theoretical framework of futures markets institutions, operation mechanisms. and other features of a well organized futures market must also be analyzed. Benchmark indexes require special attention. As they represent the underlying assets of overall markets. I review the techniques of price discovery and volatility and the various factors that innocence it. I operate on the assumption that Indexes are suitable instruments for serving as a foundation of futures contracts. I explain specification and pricing techniques of Index futures and argue that they may indeed represent a good alternative for managing stock market risk.