BSE, NSE to open trade at 9 am from today

It's a new year and a new timing for stock market traders and investors in India. And if one were to go by broker sentiment, not a very happy one.

The country's key exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will start trading at 9am from today, January 4th 2010. The opening has been advanced by close to an hour - from the earlier 9.55am, but the close will continue to be at 3.30pm.

These new timings follow a very public duel between both exchanges.

The Securities and Exchange Board of India (SEBI) in October allowed stock exchanges in India to extend their trading hours to a maximum possible window of trading between 9am and 5pm.

The SEBI move was prompted by a long-standing demand by the stock exchanges for allowing extension of trading hours to capture more trading from international investors, especially from Asian countries like Singapore where exchanges open earlier, Indian time.

However, soon after the regulator gave exchanges the go-ahead, opinion in the stock market fraternity was vertically divided with several brokers and brokerages saying lack of infrastructure could prove a hindrance to extend market hours to the full window of 9am to 5pm.

More trading, more stress: Brokers

Brokers, though, are not too impressed. “Starting the markets early will serve no purpose and the market men and brokers are getting caught in the crossfire between the two exchanges,” said broker Dipan Mehta, a member of both the BSE and NSE. He said the move would serve no purpose but would put more stress on those involved in the stock market.

Trading volumes in the stock market would go up, said Ambareesh Baliga of Karvy Stock Broking, “though it won’t be in the same proportion as the increased time".

Baliga said the move may be aimed at increasing more day-trading and capturing some trades from the Singapore’s SGX Nifty, which opens two-and-a-half hour earlier than Indian time.

“Volumes will increase because a large part of the trade flows from other parts of the world, particularly Asian markets,” said Deven Choksey of KR Choksey Securities. “It would be good as far as fund allocations to India are concerned and we would see some more action coming into the market in the early hours of the day.”

He added that most brokerages had prepared themselves, infrastructure-wise, to a possible shift to 9am.

Vinay Agarwal, Executive Director of Angel Broking, said the move could lessen volatility in the markets.

Are we ready?

The revised notice from the exchanges now says that trading hour extension has been postponed by a couple of weeks. According to experts, this by no means prepare them to deal with the technacalities involved in longer trading hours. The banks’ real-time gross settlement (RTGS) system, a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis is not in place yet—it starts only at 9.45 am, they say. This will cause disruption in the functioning of the exchanges.

Traders, who, want to make margin payment at 9 am though their banks may face a hitch. However, bankers say this isn’t a major glitch, since brokers can always make the payments via the internet.

However, in all probability, enterprising banks may think of booting their systems earlier.

Moreover, President of broker body AMNI EMC Palaniappan says, brokers’ offices may also not be able to handle the extension of trading hours as of now.

Money Control