Pre market session refers to session when trading of stocks happen before the market actually opens for trading. The primary reason why SEBI has introduced pre market session is to reduce the volatility in the stock market. Since today all stock market are interlinked therefore any happening in other parts of the world tend to have an effect on the Indian stock markets.
Therefore from 18th October 2010 both NSE and BSE will open for trading at 9.15 a.m. instead of 9 a.m. At 9:00 am, investors and traders can place their buy and sell orders for NSE and BSE stocks for a period of seven minutes. During these seven minutes, no trades will be executed. From 9.08 a.m. to 9.12 a.m. the both NSE and BSE will stop accepting orders and will calculate discovery price for the stocks. All unexecuted market orders will be converted to limit orders at the discovery price and all unexecuted limit orders would remain at the limit price at which they were placed. From 9.12 a.m. to 9.15 a.m. will be the transition time from pre-open to normal market opening. From 9.15 a.m. normal trading in stocks will resume.