How will new expiry days impact derivatives market?

Mumbai: As stock exchanges shift to new expiry days for their derivative contracts this week, traders are bracing for a shake-up in the market patterns that they have been accustomed to for years.

The National Stock Exchange's weekly and monthly derivatives contracts will now expire on Tuesdays, replacing long-followed Thursday expiries. Instead, Bombay Stock Exchange's contracts will expire on Thursdays from this month.

"This change will shift the rhythm of the weekly derivatives market," said Puneet Sharma, CEO and fund manager at Whitespace Alpha.

"With NSE's weekly expiry moving to Tuesday, we'll see more activity and sharper moves earlier in the week, especially on Mondays and Tuesdays. Essentially, what used to be the 'Thursday rush' now moves forward in the week, and that will become the new normal."

Since Nifty derivatives are more widely traded than Sensex contracts, NSE's earlier expiry day of Thursday had seen heavier volumes accompanied by sharp swings. The expiry shifts by the exchanges follow Securities and Exchange Board's diktat to bourses to restrict the expiry days to either of the two days: Tuesday or Thursday.

This is after exchanges kept separate expiry days for each contract, which resulted in heightened volatility in the market, forcing the regulator to step in.