Stock futures in price discovery

A bit more than half the work of price discovery is done by stock futures in India

What is the role of stock futures in price discovery? An informed trader is likely to prefer using stock futures because the return on equity is magnified through leverage. Empirical evidence on this is, however, a puzzle. In the international experience, the share of stock futures in price discovery has worked out to just about 20 per cent. India is a unique laboratory where the stock futures market has been quite successful. Recent research shows that in India, stock futures account for about 50 per cent of the price discovery. This share goes up to higher values at the time