logo-lakshmshree
Posted on  May 28, 2024 under  by Ayush Maurya

NSE to Reduce Tick Size to 1 Paisa for Stocks Below ₹250 from June 10

The National Stock Exchange (NSE) is set to introduce a significant change in trading for stocks priced below ₹250. Starting June 10, 2024, the tick size for these stocks will be reduced to 1 paisa. This move is expected to notably impact over 1,300 stocks listed on the exchange.

What is Tick Size?

Tick size is the minimum price movement of a trading instrument. Currently, the tick size for most stocks on NSE is 5 paisa. By reducing the tick size to 1 paisa, NSE aims to enhance liquidity and provide better price discovery for lower-priced stocks. This means that investors can now trade these stocks with a finer price granularity, potentially leading to more precise trading and investment decisions.

Impact on Stocks

According to the circular released by NSE, all stocks trading below ₹250 will be affected by this change. The new tick size will enable investors to place orders with a minimum price change of 1 paisa, compared to the previous higher increment of 5 paisa. This is expected to make the trading process smoother and more efficient, especially for small investors and day traders who deal in large volumes of low-priced stocks.

Market Reactions and Expectations

Market experts believe this reduction in tick size will increase trading activity and liquidity in the affected stocks. The finer price increments are anticipated to attract more retail investors, providing them with better opportunities to enter and exit trades at their desired price points. Additionally, the change is expected to bring about improved price accuracy and tighter bid-ask spreads.

Implementation Details

The implementation of the one paisa tick size will be monitored closely by NSE. The exchange has advised all trading members to update their systems and be prepared for the new tick size rule starting from June 10. This includes ensuring that their trading platforms can handle the finer price increments and that all necessary adjustments are made to accommodate the change.

Example for Better Understanding

To illustrate the difference, consider a stock priced at ₹200. Under the current tick size of 5 paise, the next possible trading prices are ₹200.05, ₹200.10, and so on. With the new 1 paisa tick size, the stock can be traded at ₹200.01, ₹200.02, and so forth. This finer granularity allows for a more precise price setting and can lead to better matching of buy and sell orders.

In summary, the NSE's decision to reduce the tick size to one paisa for stocks below ₹250 marks a significant step towards enhancing market efficiency and liquidity. This move will benefit investors and the overall market by providing better price discovery and more precise trading opportunities.

Do you have a news tip for Lakshmishree reporters? Please email us at media@lakshmishree.com

Ayush Maurya

Written by Ayush Maurya

Ayush is a seasoned financial markets expert with over 3years of experience. He has a passion for breaking down complex financial concepts into simple, digestible terms. Through his 50+ articles, Ayush has helped countless individuals navigate the often intimidating world of finance.

open-account-ad-2

Social Share

Subscribe to Our Newsletter

Loading
CIN No U74110MH2005PLC157942     |    Member Ship Details     |    BSE-3281     |    NSE-12817     |    MCX-55910     |    DP:IN-DP-CDSL-490-2008     |    DPID:12059100    |    SEBI Regn. No.: INZ000170330     |    Mutual Fund: ARN-77739    |    Research Analyst: registration number INH000014395
logo-lakshmshree-white
Lakshmishree Investment & Securities Ltd. was incorporated in 2005. We are a Corporate Member of NSE, BSE, MCX and Depository Participant with CDSL.
Most Popular in LISL
Copyright @ 2024 © Lakshmishree Investment & Securities Ltd. All Right Reserved.
A Guide to Infrastructure Mutual Funds 5 Reasons to Add Silver ETFs to Your Portfolio NTPC Green Energy IPO: Everything You Need to Know Beginner's Guide to Silver ETF 10 Key Things to Know About Zinka Logistics (BlackBuck) IPO 10 Things to Know About Swiggy’s IPO Maruti Suzuki Q2 FY2025 Results: A Challenging Quarter Maharatna Companies: Driving India’s Growth!