EXCHANGE TRADED FUNDS: AN INNOVATIVE INVESTMENT PRODUCT IN INDIAN CAPITAL MARKETS

Financial innovation has been acting as the catalyst in respect to the growth of trade in financial services. With the onset of technology as well as deregulation of capital market, there is a immense possibility for fetching innovation in financial products in the Indian capital market. Indian capital market comprises of equity market, debt market and commodity market. This paper attempts to introduce the Exchange-Traded Funds (ETFs) on Indiancapital market. In foreign countries Exchange-Traded Funds (ETFs) is very popular, as but in India, it is still in the initial growth phase. Exchange Traded Fund is an investment fundreplicating the stock indices i.e. BSE SENSEX and CNX NIFTY so as to provide returns that closely relate to the total returns of the securities constituted in the index. An ETF is a basket of stocks that shows the framework of an Index, like CNX Nifty.