An Analytical study of the present Indian Derivatives Market

Abstract

Maximizing earnings with minimum efforts/ costs/ risks is the fundamental of financial newlinemanagement. Abnormal sums of money in modern times could be made through Stock newlineExchanges, Currency trading, Commodity Exchanges and the like. The basic qualities on newlinewhich these exchanges operate are high risk and high volatility (which may / may not newlineresult in high returns). People get exposed to risky situations/ positions in order to earn newlineprofits derived out of the transactions entered into. newline Need as they say is the mother of all inventions. Derivatives are the modern man s newlinebusiness invention, which help people to maximize returns on their investments by taking newlineminimum risk. It involves postponement of receipts of benefits till you have reached an newlineoptimum/ satisfied level.Majority of middle class Indians / Indian Markets were unexposed to the benefits of newlineinvesting their money in stock exchanges till early 90 s. Till then they were quite happy newlineparking their money in Banks, Chit funds and other Government backed instruments. newlineThey were happy too with the fixed returns, which these instruments would offer to them. newlineThe definition of earning money changed in the 80 s with Mr. Dhirubhai Ambani newlineushering in the era of putting one s money in the stock exchanges as an alternate newlineinvestment option. In early 90 s Mr. Harshad Mehta took the momentum forward to newlinedizzying heights and motivated many more in making equity investment part of a newlineperson s financial portfolio. Dr. Manmohan Singh by bringing in tax reforms also newlinefacilitated India s common middle class man access and opportunity to invest and reap newlinebenefits from the country s most powerful and money spinning institution. newline