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Day trading emerges on the bourses

Sangita Shah

The last half-hour lag in trading is now replacing the Friday and Tuesday syndromes of the Bombay Stock Exchange and the National Stock Exchange, respectively.

Day trading, a hitherto lesser-known term in the Indian stock markets, is emerging, albeit gradually. The stock markets are getting attuned to the changed market place. The participants are changing slowly but steadily. This is amply clear from the trading patterns that have emerged over past two weeks.

It would not go unnoticed for an avid market follower that July 9 onwards, the market has been witnessing sharp fluctuations and even trading volumes in the last half-hour lag of trading.

"These fluctuations are directly linked with the day-trading activities as the traders who earlier squared up or shifted their positions on Tuesdays (weekly closing on NSE) and Fridays (weekly closing on BSE) is now being witnessed on daily basis as there are only intra-day opportunities that have to be either squared up or result in delivery," Arun Kejriwal of research firm KRIS said.

Though the new-age trading system was introduced on July 2, it took only a week for the sharp market players to get the hang of new intra-day trading strategies. While some are still not too comfortable at taking risks, the more bold ones have started making decent profits, dealers said.

If one takes a look at the last half an hour movement of the Sensex -- the barometer of Indian stock markets -- it becomes amply clear that day-traders are at the fore. For example on July 9, Sensex which opened at 3290.85 traded in a narrow range of 20 points till 1500 hrs (IST) when it registered 3280.66 and reached 3295.32 at 1530 hrs (IST).

While for five hours the Sensex traded in 20-point range, last half an hour witnessed a volatility of 15 points. Similarly there was a sharp fluctuation of 18 points in last half an hour on July 10 as against an intra-day fluctuation of around 40 points. July 11, 12 and 13 were no different.

Same pattern has been witnessed over the last three days. On Monday, the fluctuation in Sensex became sharp in last hour before the close of trade, Tuesday and Wednesday saw sharp fluctuations in last half an hour of trading.

The worries that the proportion of trading volumes will decline in the stocks under the rolling settlement compared to the volumes in the weekly settlement have turned out to be unfounded. Close to 90-95 per cent of trading volume still comprises the stocks under rolling mode and balance stems from the stocks under weekly settlement.

Moreover, under the weekly settlement mode about 4-5 stocks make up for half of the minuscule trading volume, dealers said. "The reason for proportionately high volumes in rolling mode is the liquidity. The players are sure that the stocks under rolling mode will at least give them an opportunity to either earn or lose in a day," another broker said.

The weekly punters are all set to mark a beginning but are still taking stock of the situation. However, market players are hopeful that it will not be long before more day-traders take the plunge.

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