Influential Direction of Price Discovery and Hedging Effectiveness of Zinc Futures: Empirical Evidence from India.

The paper is an attempt to evaluate the direction of price discovery and hedging effectiveness of zinc futures traded at MCX, India. The period for the study is chosen for seven years, i.e., 2013 to 2020. The influential direction between the spot and futures for price discovery has remained an important phenomenon in commodity futures research. The results confirm that there exists unidirectional causality between the spot and futures market of zinc. In the long-run spot influences futures for price discovery and conversely, the futures market influences price discovery of the spot in the short run. The zinc futures market also indicate a lack of hedging effectiveness. As the results are based on only one base metal and the period is limited to seven years, it can be extended and expanded for further research. Moreover, future research can evaluate the cross-hedging strategies of the zinc futures market. [ABSTRACT FROM AUTHOR]