The Indian derivative market has become multi-trillion dollar markets over the years. Financial markets are very inventive in augmenting the popularity of derivatives instruments which exemplifies how resourcefully markets are capable to package and manage risk. To manage the increased financial risk to the corporate world, it is necessary to develop a set of new financial instruments known as derivatives in the Indian financial markets. The emergence of derivatives market is an ingenious feat of financial engineering that provides an effective and less costly solution to the problem of risk that is embedded in the price unpredictability of the underlying assets. Derivative market has an important role to play in economic development of a country. In India, the emergence and growth of derivatives market is relatively a recent phenomenon. The present paper is an attempt to study the evolution of Indian derivative market and its role in the Indian Economy.
Financial market, risk management, derivatives, economic development
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