Perception of Investors About Financial Derivatives in Indian Stock Market

Abstract

Capital market is considered to be the barometer of any economy, because its behaviour represents the present health as well as future prospects of the economy of any country as a collective assessment of a large number of financial institutions and analysis. Derivatives trading commenced in India in June 2000. This paper is focused to study the perception about Derivatives, particularly financial Derivatives including futures and options from the point of view of the retail and corporate investors. The survey was conducted mainly with the purpose of understanding the Derivatives market along with checking its awareness from the investors' point of view. The issues covered in the article include perception of investors about cash and future options' market. The article also focuses on time horizon for the purpose of investment and preference for a particular derivative's security out of the total products. The article analyses the factors, the investors take into consideration while investing in derivative products : The detailed information was collected about the perceptions of derivatives from the investors in Punjab. Majority of investors invest in cash and future market segment. Investors investing only in cash market and future and option market alone are hedgers while investors investing in cash and futures together are speculators. The survey found that stock future is preferred for trading by investors.