What is Pre-Open Market Session? - A Complete Guide | Espresso

Pre-Open Market Session in Stock Market Explained

The trading hours in the Indian stock markets start at 9:15 AM and end at 3:30 PM. However, the pre-open market session goes on from 9:00 AM to 9:15 AM. In India, the pre-open market sessions began in 2010. And these 15 minutes open market helps in stabilizing the volatility and the unusual movement in the stock market due to some major announcements. The pre-open stock market sessions in NSE and BSE are the same.

Published on 30 January 2022

What is a Pre-open Market Session in the Stock market?

The pre-open market session is carried out in order to arrive at an opening price of a stock in the current trading session. During the first 8 minutes of the pre-open session, stock orders are collected, revised, or cancelled. In this session, traders can place market orders or limit orders. And the window for order collection can close any time between 9:07 AM and 9:08 AM.
Also Read: Best Timeframe for Intradat Trading

After the closing of the pre-open market window at 9:15 AM, new stock orders cannot be placed. Then, the orders placed by the traders are matched by the experts and then the trades are confirmed. You can place stock orders during this order collection period only on the equity trading segment.

Can Pre-open Stock Market Sessions Help Reduce Volatility?

The pre-open sessions help in stabilising the prices of various stocks from different companies by determining the real demand and supply of the stocks or shares in the market. And during this process of determining the demand and supply, a balance in the stock prices is decided. Hence, this process brings price stability as stock prices and the trades aren’t decided according to the trends.

Indian Stock Market Timings: Pre-Open Market Session Break-Up

The 15 minutes of the pre-open market session is further divided into three sub-sessions as below:

1. Order entry session

This starts at 9:00 AM and ends at 9:08 AM. During these 8 minutes, the tasks which are undertaken are:

  • Order placement for selling or buying stocks
  • Modifying or cancelling a stock order

After the order entry session or 8 minutes, no stock orders are accepted.
Also Read: How to Buy & Sell Stocks?

2. Order matching session

This starts at 9:08 AM and ends at 9:12 AM. During these 4 minutes, two tasks are undertaken:

  • Order matching and order confirmation
  • Calculation of the opening stock prices for the normal trading session

During these 4 minutes, a trader cannot buy, sell, modify, or cancel an order.

3. Buffer session

This session starts at 9:13 AM and ends at 9:15 AM. During this 3 minutes, the tasks that are undertaken are:

  • Buffering of stocks
  • Facilitating the transition from the pre-open market to the regular market hours

This particular sub-session is used as a buffer to find any irregularities in the previous two sessions.

Who Can Trade in a Pre-open Market Session?

Anyone can trade in this session. However, if you are a new trader, your stockbroker or brokerage firm may not open this session for you as they might not want new traders to trade in the pre and post open market sessions. Because during this time, the stock volatility is a lot higher due to low stock volumes.

So, if you really wish to trade during the pre-open stock market session, you need to let your stockbroker know about the same, and they will activate the pre-open market session for you in case it’s not only there.
Also Read: How to Invest in Stock Market?

Conclusion

Right now, only Sensex 30 and NIFTY 50 stocks are available for a pre-open market session at the NSE and BSE. However, the BSE pre-open market timing is the same as that of the NSE. Also, stocks and shares which are still included or excluded in the Sensex and NIFTY indices will be a part of the pre-open market sessions. So, happy investing!
Also Read: How to Invest in Nifty Index Fund?

Chandresh Khona
Team Espresso

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