Bourses’ 9am start has no impact on trading volume

Bourses’ 9am start has no impact on trading volume
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First Published: Tue, Jan 05 2010. 01 15 AM IST

New schedule: People walking in front of BSE building in Mumbai on Monday. Though the markets have advanced the opening trade by almost an hour, banks have not made any change in business hours. Sajja
New schedule: People walking in front of BSE building in Mumbai on Monday. Though the markets have advanced the opening trade by almost an hour, banks have not made any change in business hours. Sajja
Updated: Tue, Jan 05 2010. 04 25 PM IST
Mumbai: Indian stock markets started trading at 9am on Monday without any of the high drama that was played out before the implementation of extended trading hours.
The Bombay Stock Exchange’s benchmark equity index Sensex rose 93.92 points or 0.5% to 17,558.73, its highest closing level in 19 months but there was no impact on the volume of trade as foreign investors are still lying low after the New Year holidays.
New schedule: People walking in front of BSE building in Mumbai on Monday. Though the markets have advanced the opening trade by almost an hour, banks have not made any change in business hours. Sajjad Hussain/AFP
An official of National Stock Exchange (NSE) said there was no major change in the pattern of trade.
“On 31 December, when markets opened at 9.55am, the first half-an-hour of trade accounted for 17% of the day’s volume. On Monday, when it opened at 9am, the first half-an-hour trade accounted for 16% of the day’s volume. Similarly, in the derivatives segment, the difference was 1.5 percentage points,” he said.
According to him, there was no difference between the number of users logged onto the exchange system at 9am on Monday and 9.55am on 31 December, the last trading day with a 9.55am opening.
Derivative volumes on NSE were Rs42,259 crore, their lowest since March 2009 and lower than the daily average of Rs72,618 crore in December. Derivative volumes are usually lower in the beginning of a month following the expiry of old contracts on the last Thursday of the previous month. Monday was the first day of a new series of derivative contracts.
In the cash market, the trading volume on NSE was Rs14,978.55 crore, higher than its daily average in December of Rs13,947 crore. On BSE too, the volume in cash market was Rs6,591.78 crore against its daily December average of Rs4,670 crore.
Dinesh Thakkar, chairman and managing director, Angel Broking Ltd, a large retail brokerage, said: “Institutions are not yet fully active. Once they return to the market, we would see 5-7% rise in volume.”
E.M.C. Palaniappan, president, Association of National Exchange Members of India that protested against the 9am opening, said there were no technical glitches and trade went on smoothly. “Our offices were open and we did not experience anything extraordinary. It appears that the first hour of trade just shifted forward. We need to look at the trading data for finer details.”
“During the first half-hour’s trade, nearly 2.6 million shares of Nifty (stocks) were traded today. This is like any other normal day’s first half-hour trade,” said K.N. Rahaman, head of research, Way2Wealth Brokers Pvt. Ltd.
“Brokers were expecting a little more volatility in the morning due to the shortened gap between India and other Asian markets but the real activity still came after 10am when the clients started putting orders,” Rahaman added.
“Volumes will depend on news flows, and not really on trading hours,” said the head of research of a Mumbai-based brokerage.
Though the markets have advanced the opening trade by almost an hour, banks have not made any change in business hours. Till last week, when the markets used to open at 9.55am, banks used to open at 9am, giving brokers enough time to queue up large orders. But now since banks and markets are opening simultaneously, banks may not have sufficient time to execute large orders which may require margin payments, one broker said.
This is one of the reasons why institutional investors stayed away from placing big orders before 10am.
Business with foreign institutional investors, or FIIs, considered to be key drivers of Indian markets, was as usual even with the new timings. “For us, there was no change in usual business, because as an FII we can place order any time during the day,” said Ullal Ravindra Bhat, managing director of the Indian arm of Dalton Strategic Partnership Llp, an FII registered with the Securities and Exchange Board of India, or Sebi.
Bhat too believes that extended hours will not increase trading volumes.
Though it has been business as usual for fund managers and senior executives, dealers and back office staff at brokerages may feel the heat as they need to start their day much earlier.
Most of these dealers and back-office employees work on a relatively low pay scale and commute from distant suburbs.
Till last week, most of these people used to start their day at 6.30am to reach office before 9 am but now with the market itself opening at 9am, they are compelled to begin their day much earlier.
Even the mid-sized brokerages are being affected. Some of them are even toying with the idea of shifting offices to the suburbs to cut down the travel time for their dealers. “It is hard to find good dealers. Brokerages are looking into various options. Some of them may move their trading and back-office operations to the suburbs to save on commuting time,” said Harish Vasudevan of SVS Securities Ltd, a Mumbai-based brokerage.
JSW Energy Ltd made its debut on bourses on Monday, the first listing of an initial public offering in 2010. The stock gained marginally to close at Rs100.75 on BSE against its issue price of Rs100.
n.subramanian@livemint.com
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First Published: Tue, Jan 05 2010. 01 15 AM IST