NSE Extended Trading Hours Pros and Cons

By | July 25, 2018 3:44 pm

NSE Asks Clients To Get Ready For Derivative Trading Till 11:55 P.M.

As of now the stock market trading starts at 9.15 am and ends at 3.30pm. extending the timing to 11:55 PM will have a huge impact on many people. Many traders saying we might not trade same was seen when Stock Exchanges started trading from 9:15AM  instead of 9:55 AM. It will be little difficult in starting days After 2 months, We all used to it, and the trades go on.

Let us just discuss them in detail.

Traders will find less liquidity in the market if the time is increased ,which will raise the risk of stop losses not getting triggered for the big traders as price may Skip the Stop loss level. Volume may increase, as more people can trade after their 9- 5 job. Less Possibility of Big Gap Up and Gap Down. Results reaction will be seen immediately for companies declaring results are 3:30 PM Today.  Traders can develop lot of Health issues as sitting on the chair for so long. As a Blogger I might face difficulty in Updating the Daily Analysis as  data will come late in night, Still need to find some workaround for it.

Lower liquidity: Liquidity refers to the ability of traders to buy and sell securities easily without materially affecting prices. Generally, the more market participants there are and the more orders that are available, the greater the liquidity, allowing traders to get their orders executed quickly at competitive prices. Liquidity can be substantially lower in the after-market session. This can lead to delays in execution, partial fills, or no fills at all. We need to see How it reacts but its a valid concern.

Wider spreads: The spread is the difference between the bid (the highest price offered by all buyers) and the ask (the lowest price offered by all sellers). Because of generally lower liquidity, spreads tend to be wider.

Higher volatility: Volatility refers to the range of prices that occur in trading. Due to the lower liquidity and wider spreads volatility can be considerably higher than in the regular session. This could lead to inferior pricing on some trades.Mid and Small Cap Derivative Stocks will be even more volatile due to small float. Hence, it would be riskier than before investing in them. Large caps will not be impacted much though.

Ability to react to news events: Many companies release earnings after the close of the regular session. After-hours traders can immediately place trades to manage their positions without having to wait until the next day’s open. The example below shows IBM making a big move after hours after releasing their earnings report.Price sensitivity news about company, economy will be traded live. Imagine News on Recapitalization on Bank came and you can take position in Bank Nifty/Nifty and not missing moves in Gaps. Most of things happens around 5.00 to 7.30 pm. Most US Data will be published around 6.00- 7 PM pm on IST, this will impact our market. Like JOB data etc.,

The brokers: The very few people who will be benefited will be the brokers and sub-brokers. More the trading, more the brokerage. As simple as that. More work for stock brokers since they need to execute orders for their clients,which will increase the work stress for their employees(dealers) and also the cost.

The Media: Lot more TV Shows will be added Like Market at Tea, Trade market with tea 🙂 The only advantage to the media houses will be that their earnings may increase because the TRP of the shows post market gradually falls.

The stock exchange: Stock exchanges like NSE and BSE will have more revenue due to extended trading hours. But again, their employee cost will also increase due to more trading hours. But yes, they will earn more.Big work for depository participants like NSDL and CDSL in the evening,who need to do settlement for the trading participants within T+2 days(trading plus 2 days)

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