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by Editors at SAS-Online | Aug 11, 2017 | Market Pulse, SAS Updates | 0 comments equilibrium price determined
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If you are a trader you must have seen that there is a pre-open session from 9 am to 9:15 am for both the National Stock
POA is needed in Demat
Exchange (NSE) and Bombay Stock Exchange (BSE). It is basically the period of trading activity that takes place just before
Account?
the regular stock market session. Traders keep a close eye on thisPre-marketsession to guess the strength and mood of
themarketwhile looking forward to market opening. Let us try to understand how things work during these 15 minutes. Editors at SAS-Online on Why

POA is needed in Demat

At the outset let me tell you that you can place two types of orders in the stock market market order and limit order
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(refer to the following graph).
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POA is needed in Demat

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The 15 minutes of pre-open session consists of 3 time slots May 2017

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Say for example, previous day closing price of Stock A is Rs. 200. The following table gives the price and quantity gures
during the pre-open session Circulars & Updates

Demat Account
Demand & Supply
Order Book ELSS
Quantity Maximum Tradable
Share Price Unmatched Orders Events
Quantity
BUY SELL Demand Supply Investor

Market Pulse
202 1000 985 3400 985 985 2415 News

Quiz
204 1275 1161 13600 22000 22000 -8400
SAS Updates

205 5000 4300 10000 10500 1000 -500 Trader's Corner

207 4000 7500 4000 6250 4000 -2250

199 2000 10000 27000 37000 27000 -10000

Share price Rs.199 corresponds to the highest tradable quantity of 27000 and hence will be considered as the equilibrium
or call auction price.

Case II

Lets have a look at another possible scenario.

Demand & Supply

Order Book
Quantity Maximum Tradable
Share Price Unmatched Orders
Quantity
BUY SELL Demand Supply

202 1000 985 3400 985 985 2415

204 1275 1161 13600 22000 22000 -8400

205 5000 4300 27000 10500 27000 16500

207 4000 7500 4000 6250 4000 -2250

199 2000 10000 27000 37000 27000 -10000

The above table shows maximum tradable quantity corresponding to two prices.

In that case minimum unmatched orders quantity corresponds to Rs.199 (10,000) and not Rs. 205 (16,500). Hence in this
scenario share price of Rs.199 will be taken to be the equilibrium price or co-auction price.

Case III

A further possibility is that both maximum tradable quantities and unmatched orders are the same as the highlighted
rows in the following table show.

Demand & Supply

Order Book
Quantity Maximum Tradable
Share Price Unmatched Orders
Quantity
BUY SELL Demand Supply

202 1000 985 3400 985 985 2415

204 1275 1161 13600 22000 22000 -8400

205 5000 4300 37000 27000 27000 10000

207 4000 7500 4000 6250 4000 -2250

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Case IV

But if both the prices are equidistant as is shown by the following table.

Demand & Supply

Order Book
Quantity Maximum Tradable
Share Price Unmatched Orders
Quantity
BUY SELL Demand Supply

202 1000 985 3400 985 985 2415

204 1275 1161 13600 22000 22000 -8400

201 5000 4300 37000 27000 27000 10000

207 4000 7500 4000 6250 4000 -2250

199 2000 10000 27000 37000 27000 -10000

In this case the previous days closing price will be the equilibrium or call-auction price.

Remember
Limit orders will get precedence over market orders during execution.
All market orders will be executed at the determined equilibrium price or call-auction price.
All limit orders that are not executed will be moved to the regular trading session.
A uniform 20% price band is applicable to all eligible stocks during these 15 minutes

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