Derivative Trading and Stock Market Volatility in India

Stock prices are changed every day by the market. Buyers and sellers cause prices to change as they decide how valuable each stock is. Stock market volatility is significant and understanding it is imperative to investing in stocks that suit your investment or trading style and risk tolerance level. The derivative trading was initiated in the Indian Capital Market by the Government following L .C. Gupta Committee Report on derivatives in December 1997. The present study examined the impact of derivatives trading on the stock market volatility. The study attempted to estimate the volatility implications of the introduction of derivatives on the cash market. Through this study, we seek evidence regarding whether the listing of futures and options lead to any significant change in the volatility of the stock market in India