Indian equity market added one more feather to its cap by starting equity derivatives segment in the year 2000. Since then derivatives market has outperformed cash market on many counts. As equity derivatives market further evolves, it is sure to witness many surprises that are yet to be unveiled. This article primarily discuses about the Indian equity derivatives market and the need to buy these derivatives.

It has been more than half a decade now since the first brick was laid for the introduction of equity derivatives. The volumes in the equity derivatives segments have skyrocketed since then (see chart 1). However, much of this credit goes to stock futures and index futures. If one looks at the segment-wise break up one would see a pretty lopsided picture where stock futures contribute 65% of the total volumes; index futures contribute 25% while index options and stock options contribute 5% each.

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