After over nine months of planning, the National Stock Exchange (NSE) formally plans to extend trading hours in the equity derivatives segment. This is significant since the NSE is already the third-largest exchange in equity trading. It also maintains its position as one of the most prominent derivatives exchanges. Additionally, its Nifty 50 equity index recently achieved an all-time high of 18,887.60 due to strong liquidity in various product categories like equity, derivatives, and currency derivatives. Once the plan to extend hours is rolled out, there is a solid belief that these sectors will benefit from the influx of new investors.The current state of trading across India
Currently, India’s financial landscape is at a record high with new investors regularly joining the promising market. For instance, in July this year, the Singaporean Stock Exchange (SGX) index was launched on the NSE International Exchange (NSE IX). This development was another leap for the Indian stock market since the move strengthened global derivatives and exhibited international collaboration, further solidifying India’s uptrend in the financial markets.
Trading indices derivatives is also at the forefront of Indian financial trading. Currently, investors can trade indices nearly every day of the week. The markets open on Sundays at 10 pm and close on Fridays at 8 pm. Aside from this, the Indian index trading market remains reactive to economic news releases, geopolitical events, and macroeconomic developments related to various trades. With the impending changes on the horizon, index trading in India is expected to experience subsequent growth given the Nifty 50
The implications of the extended NSE hours
The extended trading hours for the equity derivatives segment will take place in various phases. When this extension is approved, a considerable adjustment is required from all stakeholders. For instance, there is the synchronising of different timelines, as the extended trading hours are planned to run from 6 pm to 9 pm. The bourse also adds that the initial products introduced in the evening session are index futures and options, including Nifty 50 and Bank Nifty. When fully rolled out, the extended hours are expected to aid local traders since they can be more involved with global trading windows. This is essential since the Indian Stock Market closes before the US markets open.
With these changes looming for the NSE, the Bombay Stock Exchange (BSE) may not be far from joining the transition. According to the Securities and Exchange Board of India (SEBI), the NSE and BSE must prepare their respective systems for handling extended trading hours. This preparation will allow for smoother trade settlements whilst also lessening setbacks. In addition, the longer hours are also poised to benefit the market movements in the BSE. To illustrate, since the market relies heavily on global cues from institutions such as the US Central Bank Federal Reserve and Foreign Institutional Investors (FIIs), extended hours allow for more timely asset movements.
That said, there are concerns that evening trading could consume traders’ time. Despite this, the potential ofextending the trading hours cannot be understated. In the long run, the extension is believed to be more positive since it opens the door for more investors to join the Indian trading market. Over time, this will help with the country’s aim of more economic growth as it becomes a financial trading hub on par with the US and the UK.
In the subsequent phases, the NSE plans to extend the evening session until 11:30 p.m. Additional products like stock derivatives are scheduled to be incorporated into the mix.