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Pre-market trading (more popularly known as the “pre-open session”) is a 15-minute session conducted before regular equity-market trading begins. On stock exchanges, such as NSE and BSE, it helps in establishing the opening price of securities through a “call-auction” process.
During this session, trades do not take place continuously as they do during normal market hours. Instead, buy and sell orders are collected and then matched at an “equilibrium price”. It is the price at which the maximum possible quantity can be traded.After the end of the pre-trading session, the regular equity trading begins at 9:15 AM. (Source: NSE India)
What are the Pre-Market Trading Hours?
The regular pre-open session runs from 9:00 AM to 9:15 AM IST. As per the current NSE regulations, the session is divided into three stages:
Phase
Time
What May Happen
Order Entry: Phase 1
9:00 AM to 9:05 AM
Market and limit orders can be entered, modified, or cancelled.
Order Entry: Phase 2
9:05 AM to 9:10 AM
Only limit orders can be entered, modified, or cancelled. Market orders cannot be modified or cancelled during this phase.
Order Matching
9:10 AM to 9:12 AM
Orders are matched, and the equilibrium/opening price is determined.
Buffer Period
9:12 AM to 9:15 AM
Transition from the pre-open session to regular trading.
Additionally, NSE also uses an automated “random closure” during the final two minutes of the order-entry period. Thus, the order-entry window may not necessarily remain open until exactly 9:10 AM.
Also, the pre-market trading can have lower liquidity and wider bid-ask spreads than regular market hours. Consequently, the price available before the opening bell may differ from the price when regular trading begins.
Note: Pre-open should not be confused with an unrestricted early-trading session. Its primary purpose is price discovery and establishing the opening price, rather than providing a separate continuous trading window before 9:15 AM.
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