Yesterday after the markets closed, SEBI put out a statement through a circular announcing that trading hours would be extended upto 11.55 pm effective October 01, 2018.
You can read that statement at – https://www.sebi.gov.in/legal/circulars/may-2018/trading-hours-on-stock-exchanges_38849.html
The circular clears the hurdle in extending trading hours allowing derivative traders significant leeway to adjust positions in case the US markets in particular, acts randomly in their cash market hours.
Of course, the decision was left to the stock exchanges and their clearing corporations to implement but that should not be a problem as SEBI has smartly pointed out that the commodity exchanges are already doing it.
At Vtrender our entire team, and I included, we have been vocal and wholeheartedly support the new ruling.
The events of Feb and March and to a smaller extent in April are too fresh in our minds when a volatile US market produced swings of 50 and 100 and more points between our close and the open leaving derivative traders like us with open positions helpless and those with no positions ruing the opportunity lost.
At the least, the decision of SEBI buys us all an insurance cover we all needed.
Our markets timings have always been in sync with Asia and Europe but what was missing was that connect to the US markets. Whilst the markets in the US have traditionally traded a small range we have seen them gyrating between 40- 80 points ( SPX futures) in the past 12 weeks affecting inventory of existing traders between the close and the open the next day. There was precious little which could have been done except maybe watching the Sgx or the Dow or prepare a strategy for the next open.
The extension to 11.55 pm if implemented will allow all of us not just to capitalize on new information which may not be there at the close at 3.30 pm IST, but also to protect a position which we have carried already. It also adds more opportunity for a day trader to capitalize on a move in the first hour of the US session or events such as the FED decision which can break around 11.30 pm.
I see the decision as an insurance cover for those odd days which you may want to encash purely because it would be available from Oct 1.
On other days the Nifty would be moving an average of 30- 40 points from the close which should not bother you much if it is a low volume markup. The volumes are expected to be low especially the period between 4.00 pm and 7.00 pm with a pickup when US cash opens and then maybe another volume spike in the last 2 hours between 10.00 pm and 12.00 pm.
What would be needed is an understanding of the US markets and the way they auction, a process which most of us follow anyway.
There is absolutely no need to keep staring at the screen for the extended hours or search for opportunities in a low volume market driven by locals.
Overall we are prepped and ready for the decision come October 1 as trading opportunity would be better for the willing .