In India, investors can trade in assets and securities even after the stock markets close. This type of trading is called after-hours trading.
The Securities and Exchanges Board of India (SEBI) authorises traders to indulge in trading outside of regular trading hours through an investment tool known as the after trading hours. This tool is especially useful for people who do not have the time to watch the market during the trading hours, for whatever reasons.
Placing any orders for buying or selling equity derivatives and commodities after the stock markets have closed for the day amounts to after-hours trading. Such orders are called after-market orders (AMOs).
What is after-hours trading?
In India, there are two primary stock markets—BSE (formerly Bombay Stock Exchange) and National Stock Exchange of India (NSE). Both these markets operate from 9 AM to 3:45 PM.
While regular trading happens during these hours, you can also trade after the markets shut through after-hours trading. You can place an order for buying, selling, delivering or receiving securities or commodities any time between 3.45 PM and 8:57 AM the next trading day. These orders are registered as AMOs. These orders are pushed into the market as soon as they open on the next trading day.
But why should you take part in after-hours trading, you may ask. Here’s an instance: You’ve had your eye ten shares of Yes Bank that you wanted to purchase at Rs. X per share. However, on a particular day, when the prices are close to your expectations, you couldn’t find the time to purchase during the trading hours. Don’t worry. You can still buy the shares through after-hours trading. If you think that the shares are likely to open at similar rates the next day, place an AMO.
After-hours trading is also ideal for overseas Indian nationals who want to make investments back home. For example, if you live in the United States of America, you needn’t stay up late into your night and wait for the markets to open in India. Place an AMO, and you’re good to go.
What are after-hours trading timings?
The BSE and NSE shut shop at 3.45 PM. They re-open at 9 AM the next day. After-hours trading takes place in the period between when the market shuts down and then re-opens the next day. You have to careful while placing an AMO too close to opening time.
Here are the exact timings: If you want to trade in equity, the after-hours trading takes place from 3:45 PM to 8:59 AM for BSE. The same for NSE is from 3:45 PM to 8:57 AM.
To place an AMO for currency trading, you have to trade between 3:45 PM and 8:59 AM. For trading derivatives such as future and options (also known as F&O), the after-hours trading takes place between 3:45 PM and 9:10 AM.
Why is after-hours trading important?
After-hours trading gives you the option of trading at attractive prices at your own pace. It helps you plan your investments well, too.
One of the reasons for you to invest in after-hours trading is that it gives you the time to analyse market trends. You see how the stock has behaved, look out for government announcements that can impact the stock or release of financial statements by a company. So, while it may seem like after-hours trading helps you catch up on market trends, it also enables you to plan.
After-hours trading may help you minimise losses if used wisely. If you foresee a change that could lead to a drop in prices in future, you can cut your losses by selling your stocks ahead of the slump.
At the same time, you should be careful of the negative repercussions of after-hours trading. When you sell stock during after-hours trading, you expect a specific price for it based on how the stock closed the previous day. This may not be true every time.
Also, if you place an AMO, you cannot place it with a stop-loss order to minimise your losses. Stop-loss orders are orders that come riders for selling stocks only if the prices reach a certain number.
How do I place an order for after-hours trading?
After-hours trading is as simple as regular trading. Register with Angel One for your Demat account by clicking here.
If you are our existing customer, log on to your Demat account after regular market hours. Place and order for buying or selling an equity derivative or commodity, just as you would for regular order. Click on the option for AMO. We will take your order and push it to the stock market as soon as the market opens the next day.
After-hours trading may come with risks, but trading is risky business anyway. If done well and wisely, you can reap the benefits of after-hours trading at your own pace. Use it as a tool to analyse market trends, take a careful decision.