EMPIRICAL ANALYSIS OF RISK REDUCTION THROUGH STOCK FUTURES IN SELECTED IT EQUITIES IN INDIA
EMPIRICAL ANALYSIS OF RISK REDUCTION THROUGH STOCK FUTURES IN SELECTED IT EQUITIES IN INDIA
Dr. N. Venkateswaran1, Mr. Santhosh T2
1Dr. N. Venkateswaran, Professor and Dean Panimalar Engineering College, Chennai - 600123
2Mr. Santhosh T, Student, Panimalar Engineering College, Chennai - 600123
Abstract: This study examines the effectiveness of stock futures in reducing risk in selected IT equities in India. The analysis is based on secondary data collected from the National Stock Exchange (NSE), focusing on companies such as TCS, Infosys, and HCL Technologies. Daily closing prices of both spot and futures markets are used to calculate returns and analyze market behavior. The study applies statistical tools such as mean, standard deviation, correlation analysis, and paired sample t-test to evaluate risk and return characteristics. The results show that while spot and futures returns exhibit slight fluctuations, hedged returns are more stable with significantly lower volatility. The correlation analysis indicates a strong positive relationship between spot and futures returns, supporting the effectiveness of futures in hedging. Although the paired sample t-test does not show a statistically significant difference, the overall findings highlight a clear reduction in risk after hedging. The study concludes that stock futures serve as an effective tool for risk management and help in stabilizing returns in the equity market.
Keywords: Stock Futures, Risk Reduction, Hedging, Equity Market, IT Sector, Correlation Analysis, Standard Deviation, Paired Sample t-Test, Volatility, NSE