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More tradings hours may lessen volatility: Raamdeo Agrawal

Published on Fri, Oct 23, 2009 at 16:19 | Source : CNBC-TV18

Updated at Mon, Oct 26, 2009 at 09:39

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More tradings hours may lessen volatility: Raamdeo Agrawal

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Nifty

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You may soon be able to trade in the Indian stock markets between 9 am and 5 pm, with the Securities and Exchange Board of India (SEBI) giving the go-ahead for stock exchanges to extend trading hours. SEBI released an official circular on its website saying it was okay with trading hours being extended.

The rationale: the market regulator believes it is important to align Indian markets as far as possible with international markets, as it would attract international trading.

The stock exchanges will take a final decision in this regard even though both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) had been calling upon the regulator to allow trading hours to be extended and sources say the NSE may soon implement the extended trading hours.

The stock exchanges asked for a time extension in trading hours to counter the emerging Singapore-based SGX Nifty, which opens at 8am India time, and which could be impacting volumes on BSE and NSE.

Brokers react

"We welcome this move of extending trading hours, since it would provide us an opportunity to do more business at marginal or no cost impact. This further provides an opportunity to NSE to try and align their timings to that of a few Asian markets like the SGX since this exchange permits trading in Nifty," said Angel Broking CMD Dinesh Thakkar. "As a broker, I don't think it will make much of a difference to our schedule because the currency market starts at around 9am and commodity trading ends at around midnight."

Thakker was of the view that brokerages and exchanges would be able to draw up the necessary infrastructure within a matter of few weeks. The extension of trading hours may attract new sets of investors, particularly from abroad, he said.

'Volatility may reduce'

"This was awaited for sometime," said Raamdeo Agrawal, Director and Co-Founder of brokerage firm Motilal Oswal. On a lighter note, the ace analyst added, "I think it will be harsh on the traders to reach office at 9am in the morning because then the daily routine starts at about 6:30-7am, you catch up with the newspapers and get ready with information."

Agrawal said the exchanges should consider giving a half- or one-hour break during the day. He was of the view that while fundamentally, it may not impact the market, volatility could come down.

The market's trading volumes may also go up, as a result. "The opening and the closing hours account for 50% of the trade but the extra hours would be more, so there could be a 15-20% increase in volumes," Agrawal said.

- With inputs from CNBC-TV18's Vivek Law and Anuj Singhal