The opening price you see on Kite differs from a stock's previous day's closing price for two reasons: the exchange uses different methods to calculate each price, and several factors can affect stock prices during non-trading hours.
Closing price
The closing price is a stock's trading price at the end of a trading day, making it the most recent price of a stock until the next trading session. For equities, market hours run from 9:15 AM to 3:30 PM.
The exchange calculates the closing price differently based on the type of stock:
- Non-F&O stocks: The exchange calculates the closing price as the weighted average price of the last 30 minutes of trading, from 3:00 PM to 3:30 PM.
- F&O segment stocks (Phase 1): The exchange determines the closing price during the Closing Auction Session (CAS) between 3:15 PM and 3:30 PM, based on the order matching equilibrium.
The closing price can differ from the last traded price (LTP). For example, a stock may have a closing price of ₹51.48 even if its last traded price at 3:30 PM was ₹54.
Opening price
The opening price is the price at which a stock first trades when the exchange opens for the day. Although equity markets open at 9:15 AM, the exchange begins collecting orders from 9:00 AM to 9:08 AM during the pre-market session. Seven minutes before markets open, the exchange matches these orders to determine the price at which the stock will open at 9:15 AM.
Based on supply and demand for a stock during the pre-market session, the opening price may differ from the previous day's closing price.
Why the opening price can differ from the closing price
Several factors can affect a stock's price during non-trading hours:
- After Market Orders (AMO): AMOs allow you to place orders even after the markets close. These orders accumulate overnight and can shift the demand and supply balance, influencing the opening price the next day.
- News about a company: News released while the market is closed can change what investors are willing to pay for a stock. Positive news typically increases the stock's price, while negative news can decrease it.