RETAIL INVESTORS PARTICIPATION IN INDIAS STOCK BASED INDEX FUTURES MARKET OPPORTUNITIES AND CHALLENGES

Abstract

A futures contract is an agreement between two parties to buy or sell an asset at a certain time in future for a certain price. It is a part of derivatives. The term derivative refers to a broad class of financial instruments, mainly including options and futures. These instruments derive their value from the price and other related variables of the underlying asset. They do not have worth of their own and derive their value from the claim they give to their owners to own some other financial assets or security. The asset underlying a futures may be a commodity or a financial asset. newlineFutures contracts were introduced just as a risk management tool in the financial market. However, they can be used for price risk as well as to speculate thereby attracting hedgers and speculators towards the market. newlineIndian futures market is mainly driven by Institutional investor, Retail investor and Proprietary. In 2009-10 their participation was 13.61%, 54.86% and 31.635 respectively in terms of traded volume. It was shown that retail investors play a remarkable role in Indian derivative market. As their numbers have exploded, it has become increasingly more important to understand the minds, motivations, and ....... newline