A STUDY OF SPECULATIVE TRADE AND ITS IMPACT ON PRICE DISEQUILIBRIUM A CASE STUDY OF NSE EQUITY DERIVATIVE MARKET

Dr. Sandhya Sridevi Maripini; Satyanarayana Koilada

Volume : VI, Issue : VII, July - 2016

A STUDY OF SPECULATIVE TRADE AND ITS IMPACT ON PRICE DISEQUILIBRIUM A CASE STUDY OF NSE EQUITY DERIVATIVE MARKET

Dr. Sandhya Sridevi Maripini, Satyanarayana Koilada

Abstract :

Speculative trade in capital markets is a long term concern for investors and market regulators alike. This study aimed to quantify the speculative trades in NSE equity derivative market using working’s speculative index (1960). Daily trade volumes and open interest data for each equity derivative product obtained for the period of four years. It is found that option products are more speculative than the futures and single stock futures are found to be less speculative. The study further assesses the NSE FO products in terms of speculative trades and identifies their impact on future market prices. The speculative index for each derivative product is constructed and regressed on daily average prices of a selected 80 stock futures to identify the product wise impact of speculation on market prices. Stock futures among other equity derivative products found significant in influencing the stock future prices.