Price Synergy in Spot and Future Market: A Study on Nickel Trade at MCX, India Laxmidhar Samal 1* and Sudhansu Kumar Das 2 1 Research Scholar, Utkal University, Odisha. and Lecturer in Commerce, P.G. Department of Commerce, Baba Bhairabananda Autonomous Mahavidyalaya, Jajpur, Odisha. E-mail: laxmidharsamal.ckl@gmail.com 2 Reader in Commerce, Department of Commerce, Sadhu Goudeswwar College, Jajpur, Odisha. E-mail: drsudhansu24@gmail.com *Corresponding Author Abstract: The paper is an attempt to identify the dynamic relationship between the spot and futures of nickel traded at MCX, India. The study is based on secondary data for a period ranging from 2013 to 2020. Augmented Dicky- fuller test and Phillip Perron test, Cointegration test, Granger causality test and variance decomposition are the empirical methods used in the study. The study confirms the existence of a long run relationship between the markets. In long run, the unidirectional causal effect is found between the cash and futures market of nickel whereas in the short run bidirectional causality is observed. In the long run futures market of nickel influences, the price discovery of the cash market whereas in the short run both markets influence each other for price discovery. The futures market of nickel traded at MCX, India reflects weak exogeneity in its cash market whereas the cash market of nickel reflects exogeneity in its futures market. 1. Introduction After lifting restrictions on commodity trading the futures market has been consistently showing strong and steady growth. Producers, consumers, importers, exporters, speculators, and others are actively participating for the advantage of hedging, price discovery, price risk management etc. MCX (Multi Commodity Exchange) of India accounts for about 94 percent of the total market share. Besides hedging, price discovery, and price risk management speculators also participate for profit (Eswaran and Ramasundaram, 2008). Hence futures market reflects the expectations of all the market participants (Park and Lim, 2018). Among other commodities, base metals are considered the backbone of industrial production as it is used for manufacturing capital goods. Among other base metals nickel is the main alloying metal used for the production of stainless steel. It is also used in electro-plating, coins, chemicals, Orissa Journal of Commerce Vol. 43, Issue 4, October-December 2022 ISSN: 0974-8482 © OJC India. All Right Reserved URL: www.ojcoca.org DOI: https://doi.org/10.54063/ojc.2022.v43i04.04 To cite this paper Samal, L., & Das, S.K. (2022). Price Synergy in Spot and Future Market: A Study on Nickel Trade at MCX, India. Orissa Journal of Commerce. 43(4), 46-58. Keywords Futures, Cointegration, Nickel, Causality, Price discovery JEL Classification C01, D53, G13, G14. 46 Orissa Journal of Commerce, 43(4) © 2022