Definition
Pre-Open Session
The pre-open session is a short window before regular trading begins, during which orders are collected and a single opening price is established through a call auction to absorb overnight information.
On the NSE and BSE, the equity pre-open runs for a few minutes before 9:15 am, split into order entry, order matching and a buffer. The system computes an equilibrium opening price that maximises tradable quantity, reducing the volatility and gaming that a sudden continuous open would cause.
The pre-open is an auction market mechanism that lets the market digest overnight news, earnings or global cues and arrive at a consensus opening level. Orders that don't match at the opening price are carried into the continuous session, providing a smoother transition into regular trading.
Related terms
- Auction MarketAn auction market is a trading mechanism in which buy and sell orders are accumulated and matched at a single clearing price that maximises executable volume, rather than continuously matching as orders arrive.
- Periodic Call AuctionA periodic call auction is a trading mechanism for illiquid securities in which orders are batched and matched at a single price in short, repeated auction sessions through the day instead of continuous trading.
- Price BandA price band is the maximum permissible price movement, expressed as a percentage above and below a reference price, within which a security may trade during a session before being frozen.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.