how is the opening price of stocks in Indian stock market decided?

[Fundu Vishy]

Indian market follows the concept of Order matching, when it comes to price discovery, be it on the opening price or the price during the trading hours. This is as against the concept of 'Market Making' followed by many markets wherein there are market makers who are obligated to give buy and sell prices for the stocks.

In light of the above, the price of any stock in the Indian Market is decided by the demand and supply. Those who are participating in the market can put orders on two different price parameters both for buy or sell. One of th parameter being 'Limit Order' wherein the buyer or the seller provides the price at which he is ready to buy or sell the stock and the other being 'market price order' which is a open price wherein the buyer or seller is ready to buy / sell at any price decided by the market.

Depending on the type of orders and the price at which the order has been place, the price of the stock gets identified.

To sum up, the price is identified by the demand and supply for a stock and the price at which the stock changes hands.

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Fundu Vishy - Your 'Mutual' Friend
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