Longer trading hours fails to boost Nifty futures volumes
January 11, 2010
The trading volumes of Nifty futures are shrinking irrespective of extended trade timings for the Indian bourses. From 4 January 2010, the market has been opening at 9 in the morning instead of 10, but market participation in the first hour has been extremely low. Also, the total volumes at the end of the day have not increased at all. The number of Nifty futures contracts traded in the first hour of trading was just 50,961 on 4th January, which was the first trading day of the New Year and also the first day of the January futures series. In the whole of that day, 2,37,231 contracts of Nifty futures were traded. This was much lower than the volume on 31 December 2009 (4,00,849 contracts).
The trading volumes of the Nifty futures contract did not pick up thereafter either. On 5th January, in the first trading hour, the volume of Nifty futures was 86,682; and in the whole day, 3,39,132 contracts were traded. In the next three days, the first-hour volumes were just 46,547, 46,344 and 39,419 contracts, respectively. On these days, total traded volumes in the whole day were 2,95,156, 3,25,130 and 2,77,090, respectively. Volumes picked up today (Monday, 11th January) but not by much; in the first trading hour, the volume of Nifty futures was 61,396. By the end of the day, 2,50,924 contracts of Nifty futures were traded.
It is clear that the extended hour has made hardly any impact on the trading volumes. The reason behind the early opening was to attract Nifty futures volumes from the Singapore bourse. Volumes declined towards the end of December 2009 as 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. Most fund managers were on a year-end vacation and the market also remained closed on Friday, 1 January 2010, on account of the New Year holiday. The number of Nifty futures contracts traded in the first hour of 29 December 2009 was 44,426 while on 30 December 2009, it was 42,770. On 31 December 2009, the first-hour volume was 67,680.
It was expected that volumes would go up in the New Year after one hour was added to trading. However, this has not happened so far. In fact, Nifty futures volumes on some days between 9am and 3.30pm were lower than volumes generated during earlier days when trading was done between 10am and 3.30pm.