Extended trading hours for share markets: Here’s why traders are anxious; Nithin Kamath, others weigh in

The move can attract more people towards intraday trading but it can also lead to slow movement and low liquidity.

share market time extended
Some investors are in favour of the market timings being extended, but others are against it.

The trading hours for interest rate derivatives have been extended by the National Stock Exchange (NSE) until 5 pm, with effect from 23 February. NSE is also mulling increasing trading hours for the equity and equity derivatives segments as well, and is seeking feedback from members and traders, according to media reports. Some investors are in favour of the decision, but others are against it.

Against increasing equity and equity F&O trading hours

While the move can attract more people towards intraday trading since the traders will get more time to track their position, it can also lead to slow movement and low liquidity, said Naveen Mishra, Senior Research Analyst – Equity Research, CapitalVia. He added, “Since stock brokers must execute orders for their clients, they will have more work, which will put more strain on their dealers and raise costs.”

“I’m unsure how it will affect the mental health of active retail F&O traders in the long term. Tracking P&L for long hours is stressful & can affect life outside trading. Also, active traders don’t make money, primarily due to over-trading. Longer hours can accentuate this,” said Nithin Kamath, CEO of Zerodha, on Twitter. “While it could boost revenues for the capital markets business in the short term, I’m unsure if retail investors will end up doing better. This could then potentially lead to lower participation and liquidity in the longer run, which will affect everyone,” the billionaire added.

Karthik Rangappa, VP of Zerodha Varsity, added onto Kamath’s tweet, stating that when he traded FTSE for extended hours, he “had zero life outside of the markets”. Harshubh Shah, Director, Wealthview Analytics tweeted that if the timings are extended, he will quit his trading career of 14 years, as he doesn’t want to put money over health.

For increasing equity and equity F&O trading hours

Since economies are highly connected and global markets are seeing a higher level of integration and correlation, the Indian stock market looks outward for international cues and reacts to developments in major economies across the world. “Markets which have longer trading hours can hedge the risk arising due to the global information flow in a more efficient way. Therefore, any move by NSE to increase the trading time for the equity segment will help the market participants and retail investors,” said A Balakrishnan, Executive Director, Geojit Financial Services.

In an old research paper, the Securities and Exchange Board of India (Sebi) also accounted for the impact that global connectivity has on the Indian securities market. The board stated that since certain countries have longer trading hours, the participants are able to hedge their risk effectively against all information.

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First published on: 22-02-2023 at 13:01 IST
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