Volumes in Nifty futures crash 50% on the first day of longer trading hours

Indian bourses extended trading hours by about an hour. However, the volumes in Nifty futures on the first day were one of the lowest ever in the past few years. Indeed, adjusted for one hour’s extra trade, volumes were 40% of what they should have been

Indian bourses have started business at 9.00am IST instead of 9.55am IST. It was also the first trading day of the year and the first day of the January series of derivatives. However, shockingly, market volumes crashed on the opening day.

During the day, total Nifty futures contracts traded were 2,37,231. This was one of the lowest-ever volumes of Nifty futures contracts traded, despite one hour of extra trading. The 40-day daily average of contracts traded over the five-and-a-half hour day is more than double that of today (5,18,184 contracts).

And what about the contracts traded in the first hour? The number of Nifty futures contracts today in the first trading hour were just 50,961 which is lower than what they were on 31 December 2009 (67,680). In fact, there is a reason why the first trading day of the new year of 2010 should have been much higher. A new series of derivatives started today. As a result, volumes in the first hour of trading were expected to go up massively. But the volume during the first hour of trading was poor—extremely poor—by that standard.

Markets have been trading on low volumes in late-December. As on 29 December 2009, the number of Nifty futures contracts traded in the first hour of the day were 44,426 while on 30 December 2009, the number of shares traded in the first hour of the day were 42,770. Since the global markets remained closed on Friday, 25 December 2009, for Christmas and on Monday, 28 December 2009, Indian markets were closed on account of Moharram, trading volumes remained low last week. Besides, most fund managers were on a year-end vacation. The market also remained closed on Friday, 1 January 2010 on account of the New Year holiday.

What kind of volumes should we have got on Monday? Here is an indication. The number of contracts traded in the first trading hour of Nifty futures of November 2009 contract (30 October 2009) were 131,134. This clearly shows that in the first hour of the new series of January, volumes should have been massive. However they were less than 50% of what they were in the November series.

And volumes never picked up later in the day.

So, the extended timing has hardly made any difference to the trading volumes in the early hours especially since all global markets were open after a long gap on 4th January. The reason behind the early opening was to attract back the trading volumes of Nifty futures traded in Singapore. However, the new timings have hardly made any impact on the volumes, despite the New Year and a new series of futures contracts.
 

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    COMMENTS

    J.S.Mammen

    1 decade ago

    It may be too early to make this judgement.

    Ramesh Bhat K

    1 decade ago

    The regulator think they are ALWAYS RIGHT. They give it for voting for you to decide, but the decision of implementation will be on their pre-determined decision (Not the voting majority decision). Only the time to come will make them understand (We can not).

    PRADIP SHAH

    1 decade ago

    if authority like SEBI/NSE/'BSE wants to increase the time for SGX then they should understand who is oprate there. and 40 point different quote at sgx and one single trade of upper/lower quote of 1 shares will dicide enitre inidan stpck mkt. that is pitty of beurocacy . IT is prove that makority people have no voice . and you dont have any voice against power.

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