Nasdaq's 24-Hour Trading Plan: How It Will Impact Indian Stocks and Traders

Will the introduction of 24-hour trading in US equities by Nasdaq change the way Indian markets respond to global cues? The answer is yes, and it could have a significant impact on your investment portfolio.

Nasdaq's plan to extend trading hours from 16 hours to 23 hours, five days a week, is expected to increase overnight volatility, particularly in sectors such as IT, pharma, and metals, which are sensitive to global cues.

The US market accounts for nearly two-thirds of global listed market value, and foreign holdings of US equities touched $17 trillion last year, highlighting the scale of global participation Nasdaq is seeking to tap.

Nasdaq's 24-Hour Trading Impact on Indian Markets

The most immediate impact of Nasdaq's 24-hour trading plan on Indian markets will be on information flow and sentiment timing rather than long-term market behavior. Indian investors will be able to react to developments in US markets well before domestic trading begins, which could increase overnight volatility.

Historically, Indian markets have been reactive to global risk signals, and the introduction of 24-hour trading in US equities will only amplify this trend. From a trader's psychology perspective, the extended trading hours will provide more opportunities for traders to overreact to news and events, leading to increased volatility.

In terms of market structure, the Bank Nifty and Nifty 50 will likely be more volatile due to the increased impact of global cues. The overlap between US trading hours and early Indian market hours could also open up tactical opportunities for sophisticated investors to exploit short-lived price discrepancies between US-listed American Depositary Receipts and their Indian-listed counterparts.

What Should Traders / Investors Do Now?

• Intraday traders: Focus on trading stocks that are highly correlated with US markets, such as IT and pharma, and be prepared for increased volatility during overlapping trading hours.
• Short-term traders: Look for opportunities to trade on news and events that impact US markets, and adjust your trading strategy to account for the increased impact of global cues.
• Long-term investors: While the introduction of 24-hour trading in US equities may not significantly impact long-term investment decisions, it's essential to remain informed about global market trends and adjust your portfolio accordingly.

Frequently Asked Questions

• Will Nifty fall after this news? The impact of Nasdaq's 24-hour trading plan on Nifty will depend on various factors, including global market trends and Indian economic indicators.
• Is this good or bad for bank stocks? The introduction of 24-hour trading in US equities could increase volatility in bank stocks, particularly those with significant exposure to global markets.
• What should retail investors watch next? Retail investors should keep a close eye on global market trends, economic indicators, and news that impacts US markets, as these will have a significant impact on Indian markets.

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Disclaimer: The views and opinions expressed in this article are for educational purposes only and should not be considered as investment advice. Trading and investing in the stock market involve risks, and it's essential to do your own research and consult with a financial advisor before making any investment decisions.