The Indian stock market is one of the world's most dynamic and rapidly growing financial markets. With the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) serving as the leading stock exchanges of India, the market attracts millions of investors and traders every day. However, before delving into the complexities of stock trading, it's crucial to understand the trading hours and sessions of the Indian stock market.
The stock market remains closed on weekends and holidays, and during the weekdays, it follows a specific set of timings, divided into three sessions:
Session One – Pre-Opening Session (09:00 a.m. – 09:15 a.m.)
The pre-opening session lasts for 15 minutes. During this session, traders place buy and sell orders for the securities listed on BSE and NSE.
Which type of traders are allowed to trade in the pre-opening session?
Institutional investors and high-net worth individuals usually trade in this session. However, retail investors can also opt for pre-market trading if their broker offers it. This session can be further classified into three sub-sessions.
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What happens during the sub-sessions of the pre-opening session?
The sub-sessions of the pre-opening session are as follows:
- 09:00 a.m. – 09:08 a.m.: This marks the opening time of the Indian Stock Market. During these 8 minutes, traders place orders. This means order entry and modification take place in this short span of time. Interestingly, these orders are cleared off on a preference basis when the actual trading hours begin. No orders can be placed post 09:08 a.m.
- 09:08 a.m. – 09:12 a.m.: These 4 minutes are reserved for the determination of the final price of securities, which is done by comparing the demand and supply. The price determined is thereafter used in normal trading throughout the day. Hence, this sub-session holds great significance.
- 09:12 a.m. – 09:15 a.m.: This 3-minute window serves as a transition period between the pre-opening session and the beginning of the regular trading hours. Traders can neither place new orders during these 3 minutes, nor revoke/modify existing orders.
What happens after the pre-opening session?
Session Two – Normal Session (09:15 a.m. – 03:30 p.m.)
The normal trading session, which starts at 09:15 a.m. and ends at 03:30 p.m., is a continuous trading period where traders can place orders for buying and selling securities, and also modify/cancel them as per their needs. During this period, the Indian Stock Market follows a bilateral order matching system, which pairs every buy order with a corresponding sell order and vice versa. Likewise, the prices of securities are subject to frequent fluctuations, making this session highly volatile.
What is the final trading session during trading hours?
Session Three – Post-Closing Session (03:30 p.m. – 04:00 p.m.)
When the normal trading session comes to an end at 03:30 p.m., the post-closing session begins and lasts until 04:00 p.m. It can be divided into two sub-sessions:
- Session One (03:30 p.m. – 03:40 p.m.): During these 10 minutes, the closing price of securities is calculated using the weighted average of prices at securities traded between 03:00 p.m. to 03:30 p.m. To determine the closing price of a specific index, say Nifty, the weighted average prices of all securities listed in that index are taken into consideration.
- Session Two (03:40 p.m. – 04:00 p.m.): During these 20 minutes, traders place orders for the next trading day. However, these orders are subject to confirmation only if there are enough buyers and sellers present in the market. These pre-opening orders are not affected by the opening price of the securities and get executed at a fixed price. Additionally, traders can cancel these orders during the pre-opening session the following day if the opening price does not meet their expectations.
Can orders be placed after the market trading hours?
After the regular trading hours come to a close at 4:00 p.m., traders can place orders for the next trading day, known as after-market orders. However, these orders are limited to certain companies and are executed at the opening price of securities for the following day.
Which type of traders are allowed to trade during the after hours?
Until mid-1999, retail investors were not allowed to trade after hours, but the present scenario is such that both institutional investors and retail investors can trade after hours.
The Takeaway
Timing is crucial for traders and investors to make informed decisions and gain profits in the stock market, particularly for intraday trading. Therefore, it's essential to stay updated with the stock market timings. If you're new to stock trading and want to begin your journey, contact Motilal Oswal today.