image credits : Business Standard
Although the National Stock Exchange of India, the NSE, is officially open from 9 am to 4 pm, the execution of buy and sell orders can take place only from 9:15 am to 3:30 pm. So the obvious question is what happens from 9 am to 9:15 am and 3:30 pm to 4 pm? And is it possible to buy and sell stocks barring than the official timings?
The pre-market session, also known as the pre-open session, was a concept started by NSE almost a decade ago to ensure that securities won't be as volatile during the market opening every day. The period between 9 am to 9:15 am can also be split into two different durations.
- 9:00 am to 9:07 am - this period is where the buy and sell orders are collected, modified, or canceled depending on the order. This is the period due to which the major gap-ups and gap-downs can be noticed.
- 9:08 am to 9:15 am - no new buy or sell orders are allowed to be placed during this period. The orders that were placed are matched and the confirmation of trades takes place, which helps at arriving at the opening price of the day.
However, it is not preferred to make short-term trades in the pre-market session as the liquidity is much lower than the actual market session. Plus, the price movements in this session aren't transparent and one could end up getting their trades at an unpreferred price once the market opens due to gap-ups or gap-downs.
Note that the pre-market session is available for placing orders in the equity segment only.
The post-market session, also known as the closing session is open from 3:40 PM to 4:00 PM. During this period, people can place buy or sell orders at the market price but do note that even if you place a market order it will be placed on the exchange at the closing price. For example, if the closing price of Infosys at 3:30 PM is Rs. 1350, between 3:40 PM and 4:00 PM, you can place market orders to buy/sell Reliance at market price. The post-market session is not very active or volatile and isn't an effective period to capture the price movement.
Similar to pre-market orders note that post-market orders are available for placing orders in the equity segment only.
After-market orders, also known as AMO, are the answer to "how to put a buy or sell order outside market hours". One can place market orders anytime from 3:45 pm to 8:57 am of the next trading session in the equity segment. Unlike pre-market and post-market orders, AMOs can be done in the equity segment as well as the derivatives. It's much more convenient for working professionals to place after-market orders than to trade during their work hours.