The National Stock Exchange (NSE) has announced a significant reduction in the tick size for stocks valued up to Rs 250 per share, aiming to enhance trading dynamics and facilitate better price discovery.
Currently, the tick size for stocks traded on the NSE stands at Rs 0.05 or 5 paisa. The NSE plans to decrease this tick size to Rs 0.01 or 1 paisa, allowing buyers and sellers to place orders in multiples of 1 paisa for stocks priced below Rs 250. For instance, stocks can be traded at prices like Rs 101.01 and so forth.
According to analysts, this move is anticipated to improve price spreads and potentially increase trading volumes, particularly for lower-valued shares. Kranti Bathini, Director-Equity at WealthMills Securities, welcomed the decision, stating that the lower tick size will contribute to better market liquidity and trading efficiency.
While the Bombay Stock Exchange (BSE) already employs a tick size of 0.01, it is applicable only for stocks valued below Rs 100. The NSE’s initiative aligns with market trends and aims to bolster market participation, especially for new listings.
