when there is up trend,futures are sold at price higher than actual derivative price ( eg spot nifty)and similarly when there is down trend ,futures are sold at price lesser than derivative price.this price difference is called premium and discount.
ie premium = nifty future price - spot nifty value
discount = spot nifty value - nifty future price
also these premium and discounts converges to zero at the closing date of future ie on last thrusday of every month.
