Signaling in S&P CNX Nifty Futures Market at NSE, India

This study examined the signaling effect of the efficient pricing and efficient order entry system on the trading in the NIFTY Index Futures market. The IGARCH (1, 1) two-stage model is used in this study. Results indicate that the NIFTY Futures market is not a perfect market. Rather, it is a monopoly. The market is inefficient due to asymmetric information. Arbitragers make risky profits at the cost of other market participants. Efficient pricing and efficient order entry system are therefore good signaling devices, which ensure efficient valuation