Sunday, July 18, 2010

American Shadows

All of a sudden, we seem to get strongly attached to U.S. influences.

First, the S&P500 fell almost 2.5% on Friday, about 26 points (Dow fell 260+ points). This will have some influence on india, on Monday.

Second, There is a news item in the Times of india, confirmed by the CME website - http://www.cmegroup.com/ (check out the Equity Index menu option), that Nifty futures will begin trading on the Chicago Mercantile Exchange (CME) from Monday, July 19, 2010 (that's tomorrow). This will give an unfair advatnage to traders who can trade on all three exchanges (NSE, SGX - Singapore, Chicago), since they can take or reduce positions almost 22 hours every day. Indian traders will be at a disadvantage since we cannot, open derivative trading accounts aborad (As per RBI rules). So, we have to trade only in India, while a foreign trader can keep on adjusting positions, if needed, in india, then in Chicago, then Singapore.

Chances are, the NSE will begin trading in Nifty futures till 11:55 PM. If this does not happen, then Indian traders will have to almost give up trading in derivatives.

Interesting times ahead!

2 comments:

MAYA CAPITAL MARKET said...

The writing is clear on the wall. either RBI should allow us to trade directly on overseas exchanges or local exchanges should be kept opened for trading at-least 18 hours a day.

According to me Derivatives trading in India should be opened at 6.00 am to 11.30 noon give 90 min lunch and again start at 1.00 pm to 6.30 pm give recess for another 90 min and again start 8.00 pm to 1.30 am.

Unless one is die hard crazy in derivatives trading, most of us should change our strategy to confine ourself to day trading only. But if nifty is rangebound it is difficult to make money in daytrading too - it is very difficult for trading community as well broking community, to cope up with fast changing competitive environment.

segviola11 said...

Sir,

Can you please elaborate on the rule of RBI that "since we cannot, open derivative trading accounts aborad".

Does it mean that we cannot open an account with a foriegn broker and trade NIFTY or
We cannot trade any other derivatives - NASDAQ / FTSE.

Can you also clarify about CFDs.

Regards
Murali