Sebi on Friday permitted stock exchanges to extend their trading hours in the equity and derivative segment to between 9 am and 5 pm. The existing trading hours are 9.55 am to 3.30 pm. Market participants largely welcomed the move, which is being seen as conducive to catching more overseas trades, particularly from western investors. “Derivatives of Indian equity products are listed and traded outside India. The extension of trading hours will help reduce the time gap and help a fair price discovery between time zones,” said Religare Capital Markets president-equity Amitabh Chakraborty.
Another positive fallout is the likely increase in volumes. When the SGX Nifty started trading on the Singapore Stock Exchange that goes live two-and-a-half hours earlier than Indian markets, a substantial portion of the volume shifted out of the NSE. “This will help bring volumes back to the Indian market,” Chakraborty added.
While BSE has welcomed Sebi’s decision, an NSE spokesperson said the exchange would soon be implementing the extended trading hours, which aligns with the currency trading hours of between 9 am and 5 pm.“One positive is that investors will be able to react to news breaking earlier and later in the day, and allow higher participation from global players as it will suit their timings,” said Edelweiss president Naresh Kothari.
However, Kothari pointed out some downsides, too. “The whole settlement and banking systems will come under pressure. Working hours in the back-office operations of brokerages will have to be extended, which will increase the cost of operations.” Antique Stock Broking CEO Anish Jhaveri said any extension in trading hours should ideally be commensurate with the depth of the market. “The current timing was sufficient to handle all the trades transacted on the market. The latest move will stretch the existing resources by a couple of hours.”
“Internationally, markets are open for six to seven hours with an hour-long lunch break, which enables players to re-look their strategies. In India, we traded for five-and-a-half hours continuously, so stepping up to eight-odd hours could be a challenge,” reckons a Mumbai-based broker.
“Exchanges would not have any problems, as the extended hours do not require any additional infrastructure. The challenge would be alignment with the banking system and the real time gross settlements,” he added.