Why is the opening price of a stock different from its previous day's closing price on Kite?
Let us first understand the meaning of closing price, the opening price, and how they are calculated for a stock.
The closing price is a stock's trading price at the end of a trading day. This makes it the most recent price of a stock until the next trading session. For equities, the market timing is from 9:15 AM to 3:30 PM. The closing price is calculated as the weighted average price of the last 30 minutes, i.e., from 3:00 PM to 3:30 PM in the case of equity.
The closing price is ₹51.48 which is different from the last traded price at 3:30 PM, i.e., ₹54.
To know more about the closing price and how it differs from the Last Traded Price (LTP), visit tradingqna.com/t/how-to-determine-closing-price-in-f-o/584.
The opening price is the price at which a stock first trades upon the opening of an exchange on a trading day. For equities, the market timing is from 9:15 AM to 3:30 PM. But, the exchange starts collecting orders from 9:00 AM till 9:08 AM called as pre-market window. During this time, they collect the orders and 7 minutes before markets open, they match these orders to decide at what price the stock will open for the day at 9:15 AM. To know more about market timings, see What are the market timings?
There's a pre-market window within which the opening price is calculated, and depending upon the demand and supply of a stock, the opening price may differ from its previous day's closing price. In the hours between the closing price and the next trading day's opening price, the price of a particular stock can be affected due to several factors such as:
After market order(AMO)
AMO has a major effect on the stock price between the closing and opening price because it means that orders are being placed even after the markets are closed, which results in changing the prices of stocks. To know more about After market orders(AMO), see What is an AMO and when can we place it?
News about a company
News about a company can be released while the market is closed, changing what investors are prepared to pay to own a company's share and changing the price of the company's stock without any trades occurring. In most cases, positive news would increase the stock price, whereas negative news would decrease the stock price.