Top 5 Things to Know Before the Open of Special Trading Session on May 18

Indian stock markets will be open for a special trading session on Saturday, May 18, 2024. This session, conducted by both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), aims to evaluate disaster preparedness by switching operations from their primary site to the disaster recovery (DR) site. 

Here are the top 5 things you should know before the market opens:

1. Settlement Restrictions on Recent Purchases

If you bought shares on May 17, 2024, you won’t be able to sell them during the special trading session on May 18. All trades from this session will be settled on Tuesday, May 21, 2024. Plan your transactions accordingly to avoid any surprises.

2. Limited Daily Range Expected

Based on the special trading session held earlier this year on March 2, 2024, expect a restricted daily range. Historical data showed a meager range of 52.50 points, roughly a quarter of the 10-day average daily range of 204 points at that time. Given the current 10-day average daily range of 237 points, anticipate a modest daily range of about 59-60 points for this session.

3. Anticipate Thin Volumes and Liquidity

Trading volumes and liquidity are typically low during special sessions. On March 2, 2024, the traded value in the NSE’s cash segment was Rs 10,427.23 crore with 42,04,535 trades, significantly lower than the usual trading day preceding it (March 1, 2024) with Rs 92,374.91 crore and 3,28,98,078 trades. Expect similar conditions on May 18, making it challenging to execute large orders.

4. Adjusted Trading Bands

During the May 18 session, all securities, including those with derivatives, will have a maximum price band of 5%. Securities already in a 2% or lower price band will maintain their existing bands. Additionally, all close-ended Mutual Funds (MFs) will be subject to a 5% price band. This measure is to ensure stability during the testing period.

5. Reduced Liquidity in Options Market

Given that the session is on a Saturday and of shorter duration, expect reduced liquidity in the options market. This could lead to wider bid-ask spreads, as lower trading volumes and fewer participants make it harder to execute large orders without significant price impact.

Keep these points in mind to navigate the special trading session on May 18, 2024, more effectively. Happy trading!

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.