From Wall Street to Dalal Street: How Nasdaq’s Longer Trading Hours Could Change Indian Markets

Synopsis: Nasdaq’s plan to extend trading to 23 hours a day marks a fundamental shift in global markets, promising faster price discovery, new arbitrage opportunities, and higher volatility. But as U.S. markets move closer to round-the-clock trading, will Indian markets benefit from faster global cues or face greater instability?

For centuries, stock markets have operated within fixed hours, forcing investors to wait for opening bells before reacting to news, earnings, or global events. But that long-standing rhythm is now being challenged as U.S. exchanges move toward near round-the-clock trading.

With Nasdaq planning to extend trading hours to 23 hours a day, the shift could reshape how information travels across markets, how prices adjust, and how volatility spreads across borders, raising a key question for Indian investors: will longer U.S. trading hours make Dalal Street more efficient, or more unstable?

How Do Trading Hours Work? 

In the 1600s, trading wasn’t something you could do from home. Early stock exchanges, such as those in Amsterdam and London, were physical venues where traders met face-to-face. These exchanges didn’t even start as formal institutions, the London Stock Exchange, for example, began in a coffee shop.

Back then, all trading was in-person. There were no apps or screens, just people calling out prices across tables. This meant trading could only happen when everyone was physically present, naturally limiting the hours.

This structure laid the groundwork for today’s market hours. Even as stock exchanges modernized, with major hubs like the New York Stock Exchange emerging, the tradition of fixed trading hours remained. Today, most markets run from 9:30 a.m. to 4:00 p.m. local time, with after-hours trading serving only as a partial workaround rather than a full replacement.

Nasdaq to Extend Trading Hours to 23 Hours a Day, Five Days a Week

Nasdaq is set to extend its trading hours for stocks and exchange-traded products from the current 16 hours to 23 hours, five days a week. At present, Nasdaq runs three sessions on weekdays: a pre-market session from 4 a.m. to 9:30 a.m. Eastern Time, the regular session from 9:30 a.m. to 4 p.m., and a post-market session from 4 p.m. to 8 p.m. 

Under the new 23-hour schedule, Nasdaq will operate two main sessions. The day session will run from 4 a.m. to 8 p.m., with a one-hour break for maintenance, testing, and trade clearing. The night session will begin at 9 p.m. and continue until 4 a.m. the following day. The day session will still include pre-market, regular, and post-market hours, with the opening bell at 9:30 a.m. and the closing bell at 4 p.m. Trades executed between 9 p.m. and midnight in the night session will be recorded as trades for the next trading day.

Why Has Nasdaq Decided To Extend The Trading Hours

Today’s stock markets operate on advanced technology, with trades processed in milliseconds. Yet, trading hours remain tied to an old schedule designed for a time when all transactions had to occur in person.

A 24-hour stock exchange doesn’t reinvent trading, it simply aligns market operations with what technology already allows. After-hours trading isn’t entirely new. Platforms like Robinhood and Interactive Brokers already facilitate pre- and post-market trades using electronic communication networks (ECNs) to match buyers and sellers outside official hours. However, this setup is not the same as having a fully functional exchange open around the clock.

Current after-hours trading comes with limitations. Not all securities are available, certain order types are restricted, liquidity is often low, and prices can fluctuate sharply, making trades less efficient than during standard hours. A true 24-hour exchange could address these issues, providing smoother, more reliable trading at any time.

The benefits are significant, especially for global investors. Currently, traders in Asia or Europe who want to access U.S. markets must wait for regular hours or contend with limited after-hours options. A 24-hour market would allow them to react instantly to news and events, no matter their time zone.

It’s not just about convenience. For instance, if a company announces earnings after the regular market closes, traders currently must wait until the next day to act. With a round-the-clock exchange, they could respond immediately. This concept isn’t entirely new with cryptocurrencies and currency markets already operating 24/7. Stocks are simply catching up to this global, continuous trading model.

Two Big Questions: Liquidity & Volatility

Liquidity refers to how easily an asset can be bought or sold without significantly moving its price. When there are plenty of buyers and sellers, trades can happen smoothly with minimal price impact.

In a 24-hour market, two outcomes are possible. First, extended trading hours could attract more participants, particularly from different time zones, which may lift overall liquidity. Second, trading volume could be spread across a longer window, leaving certain periods such as late-night U.S. hours with very low activity.

During these thin periods, fewer buyers and sellers would make it harder to execute large trades without moving prices. In practice, the result is likely to be a balance of both. While total liquidity could increase, some hours would still see limited participation and lower trading depth.

Volatility describes how sharply and how often prices move up or down. A round-the-clock market could help reduce sudden price swings. At present, when important news emerges after market hours, traders are forced to wait until the next session, which often leads to abrupt price gaps at the open. With 24-hour trading, prices could respond more gradually as information is absorbed, lowering the risk of sudden moves.

For example, if a major event occurs overnight, investors would be able to react immediately instead of all at once at the opening bell. This could result in smoother price discovery through the night rather than sharp jumps at the start of the trading day.

However, volatility would still vary depending on participation levels. Periods with heavy trading activity may remain relatively stable, while quieter hours could experience larger price swings. In fact, low-liquidity windows could amplify volatility. A single large trade during these thin periods might push prices sharply higher or lower, creating outsized moves that are unlikely during more active trading hours.

How Will It Affect The Indian Markets? 

Ross Maxwell, Global Strategy Operations Lead at VT Markets, said the most significant impact would be on the flow of information and the timing of market sentiment. Currently, cues from U.S. markets are largely reflected in Indian equities only at the next day’s opening. With continuous U.S. trading, price discovery would become ongoing, enabling domestic investors to react to developments in U.S. markets even before Indian markets open.

Manasvi Garg, a Sebi-registered investment advisor and founder of Moneyvesta, shared a similar view, noting that extended trading hours could allow Indian market participants to respond immediately to U.S. corporate earnings, Federal Reserve signals, and major global developments. This, in turn, could help reduce the risk of sharp overnight gaps in Indian stocks on certain days.

Volatility is expected to increase with round-the-clock U.S. trading. Ross Maxwell said continuous trading in U.S. markets could lead to higher overnight volatility, particularly in globally linked sectors such as information technology, pharmaceuticals, and metals. This, he noted, could translate into sharper opening gaps and elevated short-term swings in Indian equities.

Manasvi Garg also pointed out that trading outside core U.S. market hours typically suffers from thinner liquidity and wider price movements. Such conditions, he said, could influence Indian markets through global sentiment channels, with sudden moves in U.S. technology stocks quickly impacting Indian IT indices and adding to intraday volatility.

Extended U.S. trading hours could create some arbitrage opportunities, though these are expected to be largely accessible to sophisticated market participants. Ross Maxwell said overlapping trading windows may offer tactical opportunities, particularly in American Depository Receipts. Investors with access to global trading platforms could take advantage of temporary price differences between U.S. listed ADRs and their Indian-listed equivalents.

Several major Indian companies, including Infosys, ICICI Bank, HDFC Bank, Wipro, and Dr Reddy’s, have ADRs listed on U.S. exchanges to raise capital in American markets and broaden their international investor base. These instruments allow U.S. investors to gain exposure to Indian equities in dollar terms. Maxwell cautioned that pure arbitrage opportunities are likely to be short-lived, as transaction costs and capital controls tend to quickly erase pricing gaps.

Manasvi Garg added that similar opportunities could also arise in index futures and global exchange-traded funds. However, he noted that execution speed, technology, and liquidity would be critical limiting factors.

Brief mispricings may be exploitable when markets remain open for longer hours, but large institutions and algorithmic traders are likely to have a clear advantage due to their superior infrastructure and faster execution capabilities. Garg added that retail investors are more likely to benefit from directional market cues rather than systematic arbitrage strategies.

Ross Maxwell said that extended U.S. equity trading hours are likely to result in only a marginal increase in volatility in the USD/INR pair, noting that the foreign exchange market already operates on a near 24-hour basis. He added that sharp moves in U.S. equities during Indian trading hours could lead to quicker adjustments in foreign portfolio flows, causing intraday movements in the rupee rather than overnight shifts.

Manasvi Garg observed that, historically, declines in U.S. equity markets tend to strengthen the U.S. dollar due to its safe-haven appeal, putting pressure on emerging market currencies such as the rupee. Conversely, rallies in U.S. equities can have the opposite effect. He added that strong U.S. corporate earnings released during Indian night hours could influence U.S. futures, shape dollar sentiment, and affect the rupee’s opening levels.

Both analysts also noted that the USD/INR exchange rate is primarily influenced by broader structural factors, including India’s macroeconomic fundamentals, intervention by the Reserve Bank of India, trade balances, interest rate differentials, and foreign capital flows. As a result, extended U.S. trading hours are expected to impact short-term volatility and price discovery rather than alter the rupee’s longer-term trend.

Expert Opinions On The Decision 

Calling the move deeply problematic, the Wells Fargo trading desk warned clients that “this is literally the worst thing in the world.” It said it could not think of any single step that would “gamify the stock market even more than it has already become,” adding that the shift represents “the epitome of making trading even more like gambling.”

Jay Woods, chief market strategist at Freedom Capital Markets and a former New York Stock Exchange floor market maker, also flagged concerns around how continuous trading could affect listed companies.

He said companies require downtime to pause, hold meetings, and release information without immediately influencing prices, but noted that “listed companies need a time to break and release news events and to have meetings where they’re not moving markets, and now we’re taking that away from them.” He added that such a change would mean “you’re opening up a new can of worms.”

-Manan Gangwar

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post From Wall Street to Dalal Street: How Nasdaq’s Longer Trading Hours Could Change Indian Markets appeared first on Trade Brains.