Role of financial derivatives in Indian capital market

New ideas and innovations have always been the hallmark of progress made by mankind. At every stage of development, there have been two core factors that drive man to ideas and innovation. These are increasing return and reducing risk, in all facets of life. The financial markets are no different. A lot of innovation goes into developing financial products centered on these two factors. The Indian financial markets have undergone qualitative changes in the last decade due to phenomenal growth of derivatives. An increasingly large number of organizations now consider derivatives to play significant role in play in implementing their financial policies. Derivatives products serve the vitally important economic functions of price discovery and risk management. Moreover they are serving as the key elements in shaping the future growth of Indian Financial/Capital market. This paper focuses and highlights the role of financial Derivatives which accelerated the growth of Financial markets in India and in turn created a positive impact on Indian economy.