NSE Revises Tick Size for Stocks and Indices from April 15: What Traders Need to Know

Tick size refers to the minimum price movement by which the price of a security, index, or derivative contract can change. It determines the smallest increment in which buyers and sellers can quote prices. A smaller tick size can enhance liquidity and price efficiency, whereas a larger tick size can help reduce excessive volatility and speculative trading.

What Has NSE Changed?

The National Stock Exchange (NSE) has announced a revision in tick sizes for indices, stocks, and their respective futures and options (F&O) contracts. These changes will vary based on the price of the security and will take effect from April 15, based on the closing prices of March 28.

Changes in Tick Size for Stocks

The tick size for stocks will now depend on their price bands:

• For stocks priced below ₹250 – The tick size remains 0.01
• For stocks priced between ₹251 and ₹1,000 – The tick size remains 0.05
• For stocks priced between ₹1,001 and ₹5,000 – The tick size increases from 0.05 to 0.10
• For stocks priced between ₹5,001 and ₹10,000 – The tick size increases from 0.05 to 0.50
• For stocks priced between ₹10,001 and ₹20,000 – The tick size increases from 0.05 to 1.00
• For stocks priced above ₹20,001 – The tick size increases from 0.05 to 5.00

These modifications will apply to both the cash market (CM) and the stock derivatives (F&O) segment.

Tick Size Adjustments for Indices

The tick size for indices and their corresponding F&O contracts has also been revised:

• For indices valued below 15,000 – The tick size remains 0.05
• For indices valued between 15,001 and 30,000 – The tick size increases from 0.05 to 0.10
• For indices valued above 30,000 – The tick size increases from 0.05 to 0.20

Why Are These Changes Significant?

The revision in tick sizes could impact liquidity, trading strategies, and market efficiency in multiple ways:

• Price Discovery: A larger tick size can prevent excessive price fluctuations and improve the order book structure.
• Liquidity Management: Lower tick sizes are useful for stocks with smaller price movements, while higher tick sizes help stabilise prices of expensive stocks.
• Market Efficiency: By adjusting tick sizes based on price bands, NSE aims to enhance market depth and efficiency across different segments.

Conclusion

With these adjustments, traders and investors need to reassess their strategies to align with the new tick size framework from April 15.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.