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Stock exchanges are looking to the market regulator for a decision on whether to keep the equities segment open for a longer period of time on the day election results are declared.
Brokers have requested a one-and-a-half hour extension on Friday, May 16, and an additional session on Saturday, to allow the market to price in the impact of the Lok Sabha elections result.
An exchange official said there are no operational difficulties in extending timings but that Securities and Exchange Board of India (Sebi) would take the final call.
“There shouldn’t be a problem from an operational perspective, but the regulator will have to decide,” said the person.
“Let them (Sebi officials) get back on this…they will decide,” said another exchange official.
Interestingly, a key Sebi official who is to take a call on the same is currently said to be on leave. A spokesperson for the regulator did not respond to a request for comment. Spokespersons for the National Stock Exchange (NSE) and the BSE, too, declined comment.
“The exchange technology and risk management systems are geared up to function for extended trading hours. We would be happy to accommodate the request of brokers if regulator approves the same,” said a spokesperson for MCX Stock Exchange.
Naresh Tejwani, president of Association of National Exchanges Members of India, said an extension would allow the market to fully price in the news on the day of the results.
“There is a specific event in which there is a lot of interest. We have requested for trade timings on Friday to be extended to 5.00 pm and for the market to be kept open for two or two-and-a-half hours on Saturday,” he said.
The association has written to the exchanges and Sebi asking that timings on Friday be extended till 6.00 pm if markets cannot be kept open on Saturday.
Major brokerage houses have been divided on the market expectations from the current elections. Some have said that markets would be trading at higher multiples if there were to be a positive election outcome. Others have suggested limited upside, suggesting that the market may already be pricing in too favourable an outcome.
The BSE’s Sensex has risen 8.05 per cent so far this year, closing at an all-time high of 22,876.5 on Wednesday.
The NSE’s India VIX, an index which measures expected volatility in the days ahead, has doubled since the beginning of 2014, closing at 31.13 on Wednesday.
