Extended Trading Hours to Help in Hedging Risk From Global Uncertainties: Experts

New Delhi: Longer trading hours in the Indian stock markets can potentially decrease the overnight risk arising from global information flow, experts said on Tuesday. The remarks came amid media reports that the National Stock Exchange (NSE) is looking to extend the trading hours in the equity segment till 5 pm.

This is not the first time, when discussion over extended trading hours has created a lot of buzz. At present, the domestic stock markets are open between 9:15 am and 3:30 pm."In today's world, economies are highly connected and the integration of the global markets is gradually increasing. The Indian stock market reacts to the developments in other major economies and markets in the US and Europe. Therefore, markets which have longer trading hours can hedge the risk arising due to the global information flow in a more efficient way," A Balakrishnan, Executive Director at Geojit Financial Services, said.

Therefore, any move by the NSE to increase the trading time for the equity segment will help the market participants and retail investors, he added. Tejas Khoday, Co-Founder and CEO of FYERS, said that extending market hours in the equity F&O and currency segments is necessary for hedging overnight risk from global uncertainties.

He, further, said that resistance and negativity regarding this topic could inhibit the growth of our capital markets because financial markets are increasingly interconnected, and cutting off access to hedge will prevent India from becoming a global investment destination.

"Extended trading hours for F&O will maybe signal the maturity of our markets. They also level the playing field for domestic traders against international traders and are also good for capital markets businesses in terms of revenues, but I'm conflicted," Zerodha Co-Founder Nithin Kamath tweeted.

Market experts said that extended trading hours would assist in increasing capital formation by enabling more people from India to participate and attract foreign investors to invest and hedge their portfolios with currency and equity F&O. In January, Sebi came out with a standard operating procedure (SOP) asking stock exchanges to inform about trading disruptions to stakeholders within 15 minutes of such occurrences and extending the trading time by one-and-a-half hours in certain outage conditions. In 2018, the markets regulator allowed stock exchanges to set their trading hours in the equity derivatives segment between 9:00 am and 11:55 pm. This was similar to the trading hours for commodity derivatives segment which are presently fixed between 10 am and 11:55 pm. The move was part of Sebi's efforts to enable integration of stocks and commodities trading on a single exchange.