The Effect of Derivatives Trading on Stock Market Volatility. A Case Study of the National Stock Exchange of India

Bachelor Thesis from the year 2024 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, , language: English, abstract: This research investigates the relationship between derivatives trading and stock market volatility on the National Stock Exchange (NSE) of India, particularly focusing on the pre- and post-Futures and Options (F&O) period. Derivatives are crucial tools for managing risk in securities trading, and their role in reshaping the Indian capital markets cannot be understated. While derivatives offer opportunities for risk management and speculation, their impact on market volatility remains debated. The introduction of the F&O segment in 2000 marked a significant milestone, leading to the proliferation of sophisticated financial products and increased market participation. This study aims to analyze how derivatives trading has influenced stock market volatility dynamics on the NSE, shedding light on its implications for investors, policymakers, and market efficiency.