Five Crucial Points to Keep in Mind Prior to May 18th's Special Trading Session

May 18, 2024, is the date of a special trading session in India's stock market. By moving operations to the disaster recovery (DR) site, the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) hope to assess disaster readiness during this session.

You should be aware of the following five points before the market opens:

Purchases Made Recently Subject to Settlement Restrictions

During the May 18 special trading session, 2024, you will not be able to trade shares that you purchased on May 17. On May 21, 2024, all deals made during this session will be finalized. To stay ahead of the curve in the Indian stock market, you need to plan your purchases carefully.

Minimal Daily Range Anticipated

The daily range will be limited in light of the special trading session that took place earlier this year on March 2, 2024. There was a pitiful 52.50 point range in the historical data, which is equivalent to almost 25% of the 204 point average daily range over the past 10 days. The Indian stock market is expected to see a modest daily range of approximately 59-60 points for this session, based on the current 10-day average daily range of 237 points.

Be Ready for Minimal Amounts and Ease of Transfer

During special sessions, trading volumes and liquidity tend to be lower. March 2, 2024 saw 42,04,535 deals for a value of Rs 10,427.23 crore on the NSE stock segment, a marked decrease from the previous trading day (March 1, 2024) when 3,28,98,078 trades were recorded for a value of Rs 92,374.91 crore. Large orders may be difficult to execute on May 18 due to the stock market's expected similar conditions.

Standardized Trading Ranges

During the May 18 session, a 5% price band will be applied to all securities, including those with derivatives. Securities that are currently priced inside a 2% or lower band will remain within those bands. Also, a 5% price band will be applied to all closed-end MFs. The purpose of this step is to make sure the real stock market remains stable while we test it.

Decreased Availability of Options

Options market liquidity will be low because the session is shorter and takes place on a Saturday. The difficulty in executing large orders without substantially impacting stock prices due to reduced trading volumes and fewer participants could result in greater bid-ask spreads.

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