Indian stock market: 8 key things that changed for market overnight (2024)

FAQs

What is an overnight position in the stock market? ›

Simply put, overnight positions are trading positions that are not closed by the end of the trading day. These trades are held overnight for trading the following day.

Economic strength has a direct impact on the performance of the country's financial markets. Indicators such as GDP growth rate, inflation rate, spending and unemployment rate reflect economic health. A movement in these indicators causes the markets to respond rapidly.

Demand and supply

Stocks with greater demand may witness a rise in the prices, while stocks with an inflated supply will witness falling prices. Over time, the proportion of demand and supply tends to fluctuate, leading to price movements in the market.

Why do stocks spike after hours? A stock will spike after hours when there's significant news released that affects how the market values the stock. Most big after-hours stock price movement is the result of a company releasing its quarterly earnings results.

Overnight trading is a flexible strategy that enables investors to respond to worldwide events and market shifts after regular hours. Different markets, including FX, U.S. stocks, etc., exhibit unique characteristics during extended trading hours.

What Is an Overnight Trading Strategy? One overnight trading strategy is to place orders just before the market closes and hold the position until the market opens the next day. Other traders use overnight trading to take advantage of market changes that occur after the markets close.

Infrastructure. India has significant infrastructure development needs, and improvements in this sector are vital to the country's economic growth. India's roads, railways, seaports, and airports are often congested and inefficient, creating capacity constraints that could stymie future economic growth.

The performance of the US market can forecast economic trends in India. For instance, if there's a fear of recession in the US, Indian markets often prepare for potential volatility. The role of the US dollar: The US dollar's strength is a critical global economic indicator.

As per the Indian stock market observers, the Indian equity market is rising because of various reasons, which include US Fed rate cut buzz, ample liquidity in the market, strong global market sentiments, strong Q4 results 2024, and expected trend reversal in the Chinese economy.

Poor liquidityThe Indian stock exchanges suffer from poor liquidity. Barring a small proportio n of scrips, which are actively traded and highly liquid, most are traded infreq uently and,hence, lack liquidity.

Is Indian stock market overpriced? ›

Valuation warning

The rich valuations of the Indian markets did not reflect the true levels of overvaluation in many parts of the market. Valuations of companies in the consumption, investment and outsourcing sectors have run up sharply compared to the pre-pandemic period.

Lack of control over the fair disclosure of financial information. Poor growth in the secondary market. Prevalence of insider trading and front running. Manipulation of security prices.

​The 11 am rule suggests that if a market makes a new intraday high for the day between 11:15 am and 11:30 am EST, then it's said to be very likely that the market will end the day near its high.

Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour. For example, if a stock closed at $40 the previous day, opened at $42 the next, and reached $43 by 10 a.m., this would indicate that the stock is likely to remain above $42 by market close.

The 3-Day Rule in stock trading refers to the settlement rule that requires the finalization of a transaction within three business days after the trade date. This rule impacts how payments and orders are processed, requiring traders to have funds or credit in their accounts to cover purchases by the settlement date.

It's critical to take extra precautions with overnight trading because of the associated lower liquidity and higher volatility. So, make sure you stay alert while manoeuvring these additional factors that are often absent or do not have a significant impact during regular trading hours.

A futures contract can be shorted and can be carried or held overnight, unlike short selling in the equity segment, where the position must be squared off on the same day. To place a sell order for futures contract, MIS (for intraday) or NRML (for overnight) product type can be used to place a sell order.

The overnight limit is the position limit in a particular security or contract that can be held from the close of one trading day to the next day's open. A central bank, treasury, exchange, or broker may impose overnight limits on a trader or dealer.

Making money in stocks is usually a long-term game: Very few people make tons of money in stocks overnight. Here's how to sustainably grow your wealth with stocks.