The first thing a stock broker does when he gets into office is to turn on his computer and check what happened overnight in the US or European markets. Now, he has a better chance to anticipate and manage these global cues.
On Wednesday, the National Stock Exchange (NSE) announced an arrangement with the Chicago Mercantile Exchange (CME). NSE’s Nifty Index futures, instruments that predict movement on this index, will trade in Chicago. US futures on the S&P500 and the Dow Jones Industrial Average will also trade in Mumbai.
Such an arrangement already exists between NSE and the Singapore Exchange. But CME, the world’s leading derivatives exchange, now allows access to a much bigger pool of investors.
This gives even the average Indian investor with some US exposure the chance to hedge losses; the same with foreigners investing in India. And he can now not only see what US markets think of India, but also what India thinks of the US.
By now, this investor knows he isn’t isolated from the vagaries of global markets. This is one step towards helping him protect his portfolio.