What is pre-market in NSE? the million-dollar question for every beginner. Are you confused about how pre-market works, and how a stock opens gap up or gap down?. Well, in this article you will learn about NSE pre-market in detail. Every beginner can understand it easily.
What is pre market in NSE?
The main concept of the pre-market session is to minimize and stabilize heavy volatility due to some major events, or announcements that come overnight.
NSE pre market timings :
Pre-market has three phases :
Phase 1:
9:00 AM To 9:08 AM, in this phase we can place buy/sell orders and can modify orders, or can cancel orders.
Between 9:07 AM to 9:08 AM, at any second, NSE will stop accepting orders. After that, we cannot modify or cancel the orders.
Phase 2:
From 9:08 AM to 9:12 AM, orders matching takes place.
Phase 3:
Buffer session for any abnormalities in the previous two sessions.
That’s all about the three phases of pre-market in NSE.
How the opening price of stock decided:
After the pre-market Session is Completed, every stock will open either gap up, gap down, or flat. How will it get decided at what price the stock opens?. Let’s learn with a simple example.
Consider a stock price at 100Rs
| SHARE PRICE (RS) | BUY QUANTITY | SELL QUANTITY | DEMAND | SUPPLY | MAXIMUM ORDERS EXECUTABLE |
| 100 | 8000 | 2500 | 35000 | 2500 | 2500 |
| 102 | 4000 | 5500 | 27000 | 8000 | 8000 |
| 105 | 6000 | 9500 | 23000 | 17500 | 17500 |
| 108 | 10000 | 7000 | 17000 | 24500 | 17000 |
| 111 | 5000 | 8000 | 7000 | 32500 | 7000 |
| 115 | 2000 | 6000 | 2000 | 38500 | 2000 |
In the above table, we have the details of the share price at which the orders are placed.
We have buy and sell orders of how many shares are placed at each price.
Demand column explanation :
Let’s go through the table from the bottom. at 115rs, there are 2000 buy orders placed. Therefore the demand for 115rs is 2000.
For 111rs, there are 5000 buy orders placed. But already there are 2000 buy orders for 115rs. Therefore they are ready to buy at 111rs Also. Because they are getting it for a lower price than they want. So, the total demand at 111rs is 2000 + 5000 = 7000.
At 108rs, there are 10000 buy orders. So, the total demand is 17000. because 5000 orders at 111rs and 2000 orders at 115rs. total demand is 17000.
For 105rs, there are 6000 buy orders. so the total demand is 23000.
Finally at 100rs, the total demand is 35000 = 2000 + 5000 + 10000 + 6000 + 4000 + 8000.
Supply column explanation :
Let’s go through the top of the table. At 100rs, there are 2500 sell orders. the demand at 100rs is 2500.
At 102rs, there are 5500 sell orders. but at 100rs, there are already 2500 sell orders. This means they are ready to sell at 102rs also. Because they are getting more money.
Finally at 115rs, the supply is 38500 = 2500 + 5500 + 9500 + 7000 + 8000 + 6000.
Most orders executable column :
At price 105rs, most of the orders are executing. There are 23000 buy orders and 17500 sell orders. The buyers are ready to buy 23000 shares, but only 17500 shares are available. So they buy 17500 Shares. Finally, maximum orders are executed at 105rs. The Stock Will Open At 105rs.
RELATED ARTICLES
TYPES OF TRADING IN STOCK MARKET
EQUITY MUTUAL FUNDS,TYPES AND TAXATION ON EQUITY MUTUAL FUNDS
WHAT IS ETF ( EXCHNAGE TRADED FUNDS ), ETFs vs MUTUAL FUNDS AND STOCKS
WHAT IS AN INDEX FUND, INDEX FUNDS vs MUTUAL FUNDS AND ETFs
SGX NIFTY EXPLAINED FOR BEGINNERS
WHAT IS INDIA VIX AND ITS IMPORTANCE
