Meaning of Stock Exchange

Stock exchange is a marketplace where securities, such as stocks and bonds, are bought and sold.

In simple words Stock exchange is a place where investors meet to buy and sell securities of a Listed Company.

Anyone who deals in the Indian Stock Market should know about the timings of Trade in Indian Stock Exchange(s). The normal trading time for equity market is between 9:15 am to 03:30 pm, Monday to Friday (for both BSE & NSE).

The stock market in India is closed on weekends i.e. Saturday and Sunday. It is also closed on the national holidays.

The timings of the Indian stock market are divided into three sessions:

1. Normal session (also called continuous session)

2. Pre-opening session

3. Post-closing session

Normal Trading Session

1. This is the actual time where most of the trading takes place.

2. Its duration is between 9:15 AM to 3:30 PM.

3. You can buy and sell stocks in this session.

4. The normal trading session follows bilateral matching session i.e. whenever buying price is equal to the selling price, the transaction is complete.

Pre – Opening Session

Meaning :- Pre-Open market Session is a new innovation on the exchange side to arrive at the ideal opening price of a stock for the current trading session. The duration of the pre-open market session is from 9:00 AM to 9:15 AM, i.e. 15 minutes before the trading session starts at 9.15 AM and is conducted on both the major Indian stock exchanges i.e. NSE and BSE.

Purpose :- It is provided to stabilize heavy volatility due to some major event or announcement that comes overnight before the market actually opens for trading.

Special events, like merger and acquisition announcements by a company, de-listing of stocks, debt-restructuring, credit-rating downgrades, etc., can have an impact on investors.

So basically, the pre-open market session is conducted in the Indian stock market to discover the right price of the stock.

Pre-Open Market Session is also divided into several sub sessions :-

The 15 minutes of the pre-open market session is broken into three sub-sessions:

1. Order Entry Session

From 9:00 AM to 9:08 AM (8 Minutes):-

1. This is the order entry session.

2. You can place an order to buy and sell stocks in this duration.

3. One can also modify or cancel his orders during this period.

After these initial 8 minutes, no orders are accepted.

2. Order Matching Session

From 9:08 AM to 9:12 AM (4 Minutes)

1. This session is used for order matching and for calculating the opening price of the normal session.

2.  You cannot modify or cancel buy/sell order during this time.

3. Buffer Session

From 9:12 AM to 9:15 AM (3 Minutes)

1. It is used for the smooth translation of pre-opening session to the normal session.

Market orders that are not matched/traded during the pre-open session will be moved to the normal trading session at the opening price.

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

Post – Closing Session

1. The duration of the Post – closing session is between 3:40 PM to 4:00 PM.

2. You can place orders to buy or sell stocks in the post-closing session at the closing price. If buyers/sellers are available then your trade will be confirmed at the closing price.

Equity Market

Important Note

Most of the investors doesn’t know that there exists any facility of Pre-opening and Post closing sessions on the stock market. Most of the Investors use only the normal market session for trading in stocks. Anyone can trade during Pre-opening and Post closing sessions but Sometimes stock brokers will not activate this feature in your trading account as standard because they don’t want a bunch of new traders trading in the pre and post-market sessions when volatility is a lot higher due to low volume. So, in that case, you will have to contact your broker to activate the pre-open market session feature if it doesn’t come standard.

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April 2021