Everything on Extended Trading Hours

The quintessential market hours are the time when the stock markets remain open and functional. We've all heard of them. The bustle of stock trade activity during market hours is truly unparalleled. There has been an increase in trading hours due to the widespread use of technology in stock trades. The option has been made possible by electronic trading and communication.

First, let's talk about extended trading.

Extended trading hours are stock trading that occurs before or after regular trading hours. The trading hours of global markets are extended. These hours include pre-market and post-market trading hours, which take place before and after regular trading hours. The pre-market trading hours in the United States are between 8:00 a.m. ET and 9:30 a.m. Eastern Standard Time. After-market trading hours run between 4:00 p.m. ET and 6:30 p.m. EST.

Extended Trading Hours- The India Story

In the most influential exchanges, trading hours are extended globally. This is also true for Indian markets. They operate from 9.15 a.m. until 3.30 p.m. The markets are open on holidays and other non-market days, but they can be opened at night.

To bring India's market in line with global markets, the Indian regulator Securities and Exchange Board of India had initiated extended trading hours. Brokerage firms can also trade in commodity market until midnight in India.

There is however still no consensus on the part exchanges. SEBI must receive proposals from each exchange outlining risk mitigation measures as well as practical aspects of regulating extended trading hours. What would be the cost-benefit analysis for such a move, for example? Increased timing could also lead to an increase in income. Do you think this is a market need? Do we just follow global practices that may not be beneficial to us? This would also require an upgrade of the banking system in India. These are just a few of the questions that India needs to be clarified.

The benefits of extended trading hours

Quicker Response - Markets are very responsive to current news and other events. These events often set the tone and mood for the future. Trading may be extended to allow traders to react quicker to news and events than they would in restricted trading hours. Some companies publish quarterly reports and earnings reports during non-trading hours. These business news would allow traders to respond immediately. It is like capitalizing on the first-mover advantage.

Convenience Many investors, who aren't full-time traders miss the opportunity to invest in stock markets due to its limited hours. Part-time traders could have more trading options and be able to place more trades, capturing higher profits.

At Par, Globally:An extension like this would allow Indian markets to be on par with global counterparts. Global markets have a significant impact on Indian markets, particularly NASDAQ & DOW. The reverse is true as well. Trader would be able to benefit from extended trading hours that overlap with the global stock exchanges, due to their interdependence. Investors who are active in global markets would be attracted to a synced Indian stock exchange.

Avoid losses:Investors could also use extended trading hours to plug losses. This window allows them to exit a losing trade before regular trading starts.

Capture market: Despite volatility, some traders might get shares at attractive rates. Stocks that are affected by news events show this trend. These situations allow traders to leverage extended trading hours rather than waiting until the next working day to place a trade.

Investors should be aware of the following things regarding extended trading hours:

Brokers may have policies that allow for trading after hours. Investors should be aware of these policies.

Currently, there is a lower volume of shares being traded during extended trading hours. There are also fewer traders who trade during these hours. The lower trading activity could lead to more volatility.

It is possible for the opening price of a stock to be different from its closing price in an after-hours market. The extended trading hours may also mean that the stock prices for a stock might not reflect the same stock price during regular market hours.

Individual buyers are more likely to deal directly with institutional buyers than the latter. The institutional buyers would enjoy a competitive advantage by having access to more information and more capital.

The market will react to unfounded news and rumours. This would negate the advantage of being the first-mover. Stock prices could also fluctuate due to news stories and significant events. The environment would be more susceptible to significant price fluctuations.

Extended trading has many benefits, but investors need to be aware of the risks and volatility involved in order to maximize returns and minimize risk.

The alignment of Indian exchanges with global markets is still to be seen. This will require extended trading hours. This will force traders to step out of their comfort zone. It is important to ensure that the Indian economy continues to grow and has a strong foundation.