Performance of Select Derivatives in Indian Stock Market - A Study

Stock market plays a very vital role in emerging countries like India. It is becoming a darling of many small investors and also attracting the rural people. Investors usually perceive that all capital market investment avenues are risky; they go for different investment alternatives based on their objectives and risk bearing capacities. Among the various investment possibilities, derivative market seems to be more risky, entering into Futures and Option contract without price expectation may lead to chancy zone. Though the derivative market is meant to transfer the possible risk to counter party, the amount of risk involved is quite high. This study is an attempt to understand the performance of stocks and to analyze the correlation of performance of market indices with selected stock from different sectors. The study finds that, the stocks which have positive correlation with market indices yields higher return with higher risk.