Capital Markets Timings:
On Wednesday, January 6, 2010 16:49 by Sudip BandyopadhyayIndian capital markets are becoming more and more integrated with the international financial markets in an increasingly globalised economy. We can’t take an ostrich like stand and wish away the global trends. The International markets are 24×7 and India being a part of one global economy needs to realise the same quickly.
50% to 60% of total daily Indian equity exchange turnover comprises of trading in Nifty. Singapore Exchange (SGX) also trades in Nifty and trading at Singapore starts much before the Indian capital markets open. Foreign investors having access to SGX , take advantage of this early start and position themselves accordingly much before the Indian markets open. Apart from this disadvantage for the domestic investors, the Indian capital markets lose this Nifty turnover which happens at SGX. We need to harmonise the trading timings and remove this apparent handicap for the domestic investors.
International linkage and consequent price movements create both opportunity as well as risk which need to be managed on a 24×7 basis. Indian markets close at 3.30 pm local time when the European markets are at full swing and US markets are yet to open. The entire development in US and significant development during the day in Europe are not captured by the Indian markets. These get factored in when Singapore markets open for trading. Thus very frequently we find Indian markets opening with a significant gap which create huge risk management complication for domestic market participants. Increasing trade timing both at the beginning and towards the end will enable Indian players to better manage their risk and not get caught unaware.
Domestic infrastructures in terms of banking systems are well equipped to handle incremental trading hours particularly an early start. There is no apparent fund transfer bottle-neck for starting early trading. The infrastructure is already in place. Its only a question of getting used to operating in global environment. Sooner we do the same the better it is.
