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As the word suggests, the pre-open market session is a trading session before the regular market session. So, as the traditional market session spans between 09:15 AM and 03:30 PM, a pre-open market session spans for 15 minutes between 09:00 AM and 9:15 AM. But why should one buy or sell stocks in a pre-open market?

Whether it is BSE or NSE, the open market allows investors to trade at an ideal opening stock price. Buying or selling stocks at an ideal opening price becomes vital during periods of volatility arising from the stock-owning company’s business, economic, political, fiscal events and more. 

Let us understand the nitty-gritty of what is pre-open market and how to trade in a pre-open market exhaustively. 

Breakdown of the Pre-Open Market Session in the Share Market

The 15 minutes span of pre open market consists of three sub-sessions. They are discussed below:

Order Entry Session

This sub-session of eight minutes is for accepting market orders. The orders might be to buy or sell a stock. Once the span of eight minutes has passed, i.e. the time from 09:00 AM to 09:08 AM is over, no order would be accepted. 

Order Matching Session

The four-minute span between 09:08 AM to 09:12 AM is dedicated to matching orders and calculating the opening price for the day. One cannot modify or place new orders during this time. 

Buffer Session 

Buffer session is the span of three minutes before the regular market session. Buffer session facilitates correcting order abnormalities and transitions into regular market session. 

How do Pre-Market Orders Work?

Let’s understand pre-market orders with a pre-open market NSE order example. 

One can execute both limit orders and market orders in the pre-open market. 

So, if one has placed a limit order for a stock at NSE, the order would be executed when the stock price reaches the price specified by the trader. 

Similarly, if one has placed a market order at NSE, the order would get executed at the stock’s current best available price. 

Who can Participate in a Pre-Open Market Session?

Who can trade in the open market? The answer to this question is ‘anyone who has access to this feature through their broking portal’. These can include retail traders, institutional investors and specialised entities or market makers

Factors Influencing Pre-Market Open Sessions

Factors such as economic data and indicators (like employment data and interest rate changes), international market movements, geo-political events, business updates (like annual reports, quarterly results, and credit rating changes), and various technical, speculative and liquidity conditions can impact pre-market open sessions. 

How Does the Pre-Open Session in the Share Market Help Reduce Volatility?

Pre open market session is a sneak-peak into the actual demand and supply of shares during the market session. The early order trends help in determining the prices of shares and reduce volatility during regular market sessions.

Pre-Open Market Session vs After-Market Open Session 

Just like pre open market spans 15 minutes before the regular market session, after market open session lasts between 03:40 PM to 04:00 PM i.e. after the regular market session. Generally, volatility is lower and trading volume is higher as compared to the pre-open market. 

Conclusion: Pre Open Market

A popular saying, ‘early bird catches worm’ can rightly apply to what happens in pre open market during significant business, economic and political events. Therefore, traders need to be aware of when to place orders as well as how to do so in the pre-open market. 

FAQs on NSE Pre-Open Market

How do you trade in a pre-open market?

It is similar to placing an order during regular market sessions. 

What happens in the pre-open market?

The pre-open market works as a shock absorber to significantly volatile market conditions before the regular trading hours begin. It helps traders get early access to the market, which might help them place orders at an ideal opening stock price. 

How to place an order in a pre-open market?

You need to open your broker’s order portal between 09:00 AM to 09:08 PM. Here, you can choose the type of order (limit or market) that you wish to place. Then, you can enter the quantity and price and proceed to submit the order.