Skip to main content

Market Pre-open session - How It works and Its benefits

   With an intention to reduce volatility in various scrips at the opening of the markets, and to arrive at the ideal opening price of a scrip, the exchanges have introduced a call auction process in the pre-open session from October 18.

   The pre-open session is a new innovation to arrive at the ideal opening price of a scrip for the current trading session. The session intends to reduce volatility in the beginning of a day. Under this new arrangement, an exchange will collect orders for the first few minutes of this session. On the basis of orders received, it will arrive at the opening price and match the tradable orders to that price. The remaining orders will be moved to the normal trading session.

   The call auction process will be initially introduced for scrips forming part of Nifty and Sensex, and trading in other scrips and F&O contracts will only begin at 9:15 am when normal market trading begins. Orders not will get traded during the order entry period in the pre-open session.

   The duration of the pre-open session will be 15 minutes - from 9 am to 9.15 am.

   The session will have three phases:

Order entry period    

The order entry period is 9 am to 9.08 am. The buyer can place new orders, modify or delete old orders. The order entry can stop randomly between the 7th and 8th minute.

Order matching and confirmation period (price discovery period)    

This period is from 9.08 am to 9.12 am. The exchange arrives at the opening price and trades the matchable orders at the opening price. The client cannot modify or delete the orders during this period.

Buffer period    

This is from 9.12 am to 9.15 am. This period is used as a transition period between pre-open and continuous trading sessions.

   Then the regular market - 9.15 am to 3:30 pm - hours begin.

Trading    

The orders that have not been traded are carried forwarded to the normal trading session. Limit orders that are not traded during pre-open sessions will be moved to normal trading sessions at the same price. Market orders that are not traded during pre-open sessions will be moved to normal trading sessions at the opening price.

   Orders are traded in the second phase - order matching and confirmation phase - of the pre-open session. You will receive trade confirmations during that phase only - tentatively between 9.08 and 9.12 am.

   If the opening price is not discovered during a pre-open session, the market orders will be shifted to the normal trading session at the previous day's closing price.

   Presently, you can only place orders in scrips that form the Nifty and Sensex indices. This list is subject to change and will be notified by exchanges accordingly. You can place an order in any product (cash, intraday or margin) during a pre-open session. Pre-open session is not available in the F&O segment. You cannot place fresh offline orders or modify existing offline orders during a pre-open session.

   Also, you cannot place an order beyond plus or minus 20 percent of the previous day's closing price. For example, if the closing price of a scrip is Rs 200, you cannot place an order beyond Rs 160-240 price range during a pre-open session.

   You may view the tentative opening price for a scrip in the 'LTP' field during a pre-open session.

Order books    

For pre-open sessions, the order book of a scrip in the NSE and BSE need to be interpreted differently.

In the NSE    

The NSE order book will have four limit order legs and one market order leg on both bid and offer sides. The last leg of the order book on either side will be for market orders. All the market orders placed by you will come under this leg.

   Each limit order leg will show the exact price and quantity available on that price. For market order leg, the order book will display price as '0' and quantity as total quantity of the market orders on that side.

In the BSE    

The BSE order book will have all limit order legs and each leg will display the cumulative tradable quantity at that leg.


   Market orders will not be treated separately in the order book.

 


Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...

SBI Small Cap Fund

SBI Small Cap Fund scheme seeks to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well diversified basket of equity stocks of small cap companies. SBI Small Cap Fund has widened its margin of outperformance relative to its category and benchmark in the last one year, earning itself a five-star rating. The fund shows a hefty 18 percentage-point outperformance relative to its peers in the last one year, 5 percentage points over three years and 4 percentage points over five years. Needless to say, it has also outpaced its benchmark to deliver convincing five-year annualised returns of 37 per cent. A believer in the credo that a small market cap does not reflect business quality, the fund looks for five attributes in the stocks it buys: competitive advantage, return on capital, growth, management and valuation. SBI Small Cap Fund is among the few in this space to remain at quite a man...

Myths about Exchange Traded Funds (ETFs)

1) ETFs Are Similar to Individual Stocks: Like MFs, ETF consist of an underlying portfolio of securities that's designed to follow a specific index or investment strategy. Hence, they are as diversified as various mutual funds. 2) ETFs Only Invest in Equity: Since they are listed on the exchange, the general belief is that ETF only consists of equity asset class. Globally, ETFs are available across asset classes – equity, debt, commodities, real estate and so on. In fact, over the past couple of years, India has also seen the emergence of Gold ETFs. 3) All ETFs Are Index Funds: ETF started as a fund which used to track indices and hence they were branded as index funds that are listed. However, ETFs have progressed rapidly and are no longer associated only with passive index funds. Globally, we have seen the launch of actively-managed ETFs. In India, also we recently saw the emer gence of fundamentally-weighted ETFs on Nifty, which busts the myth that ETFs are index funds and can...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now