Derivatives trading is growing rapidly now days, at a global level. In India there are two stock exchanges which have nationwide terminals, i.e. National Stock Exchange and Bombay Stock Exchange. In this research paper the aim is to compare the performance of Index Futures and Stock Futures at NSE and BSE. The use of derivatives has increased because there is a need to hedge foreign exchange risk, which is increasing day by day, and derivatives are considered a good risk management tool. The main purposes for which derivatives are used include hedging and speculation, arbitrage and margin trading. When the purpose of an investor is reduction of price volatility in exchange markets, such investors are known as hedgers. On the other hand, when the motive of investor is potentially earning huge profit in future, such investors are known as speculators. Profit is made by arbitragers through price difference in the investment. Some investors deposits margin as a collateral deposit, to the other party in the transaction, with a motive to cover the credit risk associated with an investment. Stock market has become a major source of foreign exchange cash flow in the country, as there is a huge investment being done in through this sector at a global level.

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Keywords: Index Futures, Stock Futures, Derivatives, NSE, BSE, Global Level, Cash Flow.