Balanced Mutual Funds – Best Balanced Mutual Funds to invest in 2019

Balanced Mutual Funds – Best Balanced Mutual Funds to invest in 2019

Investment in equity and mutual funds have shown incredible growth in the past few years. One can make handsome returns by investing in the stocks and mutual funds schemes. Since mutual fund schemes have a diversified portfolio, it is an ideal investment avenue for investors who want to play safe.

There are numerous types of mutual funds and one such type of mutual fund is balanced mutual funds. A balanced mutual fund offers the benefit of diversification by allowing you to invest in multiple asset classes i.e. debt and equity. This combination of investment not only helps you earn short term income but also build long term wealth.

In this article, we will walk you through the list of best balanced mutual funds that you may consider investing in. We will also learn the meaning and advantages of investing in balanced mutual funds.

Let us first learn the meaning of a balanced mutual fund.

What is a Balanced Mutual Fund?

A balanced mutual fund is also called hybrid mutual fund. These mutual funds invest its assets in debt instruments and equities to generate good returns and reduce investor’s risk. These mutual funds are good for investors who have a conservative approach and are looking for fixed returns. Balanced mutual funds typically invest 50% to 70% of their portfolio in the stock and the remaining is invested in bonds and other instruments.

Before investing in top balanced mutual funds you must be very careful. Below is the list of best balanced mutual funds 2019 that you may consider for investing for long term.

List of Best Balanced Mutual Funds 2019

Balanced Mutual Fund Schemes August 2019

Let us now learn the advantage of investing in the top balanced mutual funds.

Advantage of Investing In The Top Balanced Mutual Funds

The biggest advantage of top balanced mutual funds schemes is that they offer diversification. The combination of debt and equity makes them less vulnerable and risky to market volatility. The debt part of the fund ensures that the investor will get an assured fixed return while the equity part is for continuous capital appreciation. Therefore, while making an investment in top balanced mutual funds, the investor must consider the combination that is offered in the scheme. 

Another benefit of investing in balanced mutual funds is that it offers the benefit of rebalancing. In situations where the equity markets are overvalued as compared to debt markets or otherwise, the fund manager has the freedom to shift between the asset classes.

Since mutual funds offer many tax benefits, let us now learn about the tax implications in the case of balanced mutual funds.

Tax Implications for Equity-Oriented Balanced Funds

The balanced mutual funds which have an exposure to equity of 65% or more fall under the equity asset class for taxation purpose. For the gains that are booked within a year of the purchase of equity-oriented balanced fund, short term capital gain tax at the rate of 15% is applicable. When these funds are held for long term i.e. more than 12 months, tax at the rate of 10% is applicable on the gains exceeding Rs. 1 lakh.

Tax Implications for Debt-Oriented Balanced Funds

The debt-oriented balanced funds are taxable just like any other debt funds. If the debt-oriented balanced funds are held for a period of 36 months or more, long term capital gain tax is applicable. On the other hand, if these funds are sold with short term capital gains, it is taxable at 20% with the benefits of indexation.

From the above taxation implications, it is clear that the equity-oriented balanced funds have a tax advantage over the debt funds. Investing in one of the top 5 balanced mutual funds will reap you handsome returns in the long run along with tax benefits.

The Bottom Line

Since balanced mutual funds invest in both debt and equity, they are an ideal investment option for people looking for the best of both worlds. Investing in balanced mutual funds ensure capital appreciation as well as minimise potential risks. Therefore, retirees and low-risk tolerant investors especially invest in balanced mutual funds. These mutual funds help to fight inflation and generate income to supplement current needs.

Whether you are a beginner or a seasoned investor, you can contact IndiaNivesh Ltd. for assistance in investing in the top 5 balanced mutual funds.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.


Best Shares to Buy for Long Term Investment in India

Stock market is one of the popular investment avenues where you can make huge wealth in the long run. Over the years the Indian stock market has given incredible returns to the shareholders. There are many top shares to buy for long term which have the potential to grow your money. If you make long term investment in the stocks of the right company, apart from the price appreciation, you enjoy many benefits like dividends, bonus shares, preferential shares, etc. However, there are many aspects that you must consider before making long term investment in a stock. Some of the factors include future growth, debt to equity ratio, market’s condition in the future, etc. So, if you are planning to invest for a longer horizon, we have made a list of the few top shares to buy for long term success.Best Shares To Buy In India For Long Term • Aditya Birla Capital Ltd.Aditya Birla Capital Ltd. has a diversified business model that involves life insurance, mutual funds, home finance, etc. The diversity of the business protects it from the slowdown in one particular sector. This leads to good performance in the form of consistent revenue and profitability. The wide and diverse business of the company ranks it among the best shares to buy today for the long term. At present, the company has a market capitalisation of Rs. 3,645.75 crores. • Can Fin Homes Ltd.Can Fin Homes Ltd. is one of the well-performing finance companies of India. The strong financial books provide a good cushion to the company even in the economic slowdown. The reliable management of the company ranks it among the best shares to buy in India for long term. The company is also not severely affected by frauds and crisis in the NBFC sector. The current market capitalisation of the company is Rs. 4,948.01 crores. • Coal India Ltd.Coal India Ltd. is one of the leading companies in the energy sector. The company has a market capitalisation of Rs. 125,565.59 crores. Today, this company is the single largest coal producer in the world. The company operates through 82 mining areas along with 7 wholly-owned coal producing subsidiaries in India. Numerous projects are already in the pipeline and order book is also very strong. Going ahead the company shall continue to fulfill the growing needs of the coal demand across the globe and remain the leader of the market. Therefore, when you think of shares to buy for long term, Coal India Ltd. is a good option. • Dr Lal Pathlabs Ltd.Dr Lal Pathlabs Ltd. is one of the good shares to buy for long term. The company functions in the healthcare sector and has a market capitalisation of Rs. 8,915.89 crores. The company owns top pathology labs in India. With quality manpower and experts, they remain one of the top players in this segment. The company has over 1,000 field executives with more than 6,000 pick up points across the country. What makes it the best shares to buy today for long term is that the company is expected to perform well and cover a good market share in the long term. • Bharat Electronics Ltd (BEL)Bharat Electronics Ltd (BEL) is in the consumer durables sector and has a market capitalisation of Rs. 22,964.89 crores. BEL is one of the leaders in supplying specialized electronic equipment to the Indian Defence Services. Apart from the defense sector, the company has a significant presence in the civilian market as well and supplies numerous products. The list of items produced by the company is long as it caters to many different sectors of the economy. Going ahead the demand for its products is expected to remain robust and the company shall grow well. Bharat Electronics Ltd (BEL) definitely falls in the category of good shares to buy for long term. • NBCC (India) Ltd.NBCC (India) Ltd. functions in the real estate sector and has a market capitialisation of 6,192 crores. Founded by the government of India, the company holds the status of Navratna CPSE. The company has a significant presence in the Project Management Consultancy (PMC), Engineering Procurement & Construction (EPC) and Real Estate Development. With the slow down in the real estate segment, the company is trading at cheaper valuations. What makes its shares to buy for long term is the expected recovery in the economy and faster execution of orders by the company. • RBL Bank Ltd.RBL Bank Ltd. is in the banking sector with the market capitalisation of Rs. 15,960.34 crores. This bank has been rated as one of the best mid-sized banks in India. RBL Bank is one of the fastest-growing private banks of the country and it is continuously expanding its presence across the different states. Currently, the bank has 332 branches in India. In the future, the customer base of the bank is expected to grow significantly. In addition, the reliable management of the bank makes it the best shares to buy in India for long term. The above mentioned are few of the shares to buy for long term. Since there are many companies listed on the stock exchange, it is important to know the different criteria that you need to consider before purchasing stocks for the long term. To assist you in selecting the best shares to buy in India for long term, we have listed down certain points that you may consider.How To Choose Stocks For The Long Run?• FinancialsThe first and foremost thing that you need to do before purchasing a stock for the long term is to analyse the financials of the company. You must check the company’s debt levels, the cash reserves available, provisions made, etc. By understanding the financials of the company, you would come to know if the company will be able to survive in the long run if recession hits the market. • Future GrowthIt is always good to invest in those businesses which show the signs of future growth. Future growth has a direct impact on the profitability of the company. If it is expected that the demand for a company’s products or services would grow in the coming years it would lead to higher profits. Being a shareholder in a company that shows consistent growth not only gives you returns in the form of share price appreciation but also in the form of a dividend, bonus shares, etc. • Government PolicyThe policies of the government have a direct effect on a company. If any sector is expected to receive boost and support from the government then the shares of companies functioning in that sector can be considered for long term investment. While on the other hand, if any sector is going to face many hardships from the government then investment in such companies must be completely avoided. • Competent Management/ Corporate GovernanceWhen you are looking for shares to buy for long term, it is always advisable to look at the quality of the management. A company with good management must be the first choice for any investor. This is because good management always ensures that ethical practices are followed in the company and there is no fraud. Therefore, invest for the long term in those companies where no one can question the credibility of the management. The above mentioned are a few things to consider before purchasing stock for the long term. In India, you can invest in the stock market only if you have a demat account. If you are a beginner and want to invest for the long term in the stock market, you may consider opening a demat account with IndiaNivesh Ltd. Our in-house experts and analysts help beginners and seasoned investors by recommending the long term shares to buy in India.

अधिक पढ़ें


Commodity Investment - How to Invest in Commodities

Have you ever thought about how the various goods and products come into existence? What goes into their manufacturing? Every product or good we use is made up of some of the other commodity. Commodities are the raw materials that are used to produce or manufacture other products. Commodities are of various types like agricultural commodities, energy, metals, etc. The prices of commodities keep changing which affect the price of end products as well. Like for example, rising Brent crude prices will lead to an increase in the prices of petrol and diesel. Since the prices of the commodities keep changing you can consider trading in them and take advantage of the price volatility. In this article, you will learn about how to invest in commodities, the best commodities to invest in and everything related to it.But before learning how to invest in commodities, let us learn where you can trade in the commodity market.Where Can YouTrade in The Commodity MarketInvestment in the commodities market in India can be done through the commodity trading exchanges. At present, there are three commodity trading exchanges in India, they are as follows: National Commodity and Derivatives Exchange Ltd. – NCDEX Multi Commodity Exchange of India Ltd. – MCX Indian Commodity Exchange Ltd. – ICEX Out of the above mentioned exchanges, MCX and NCDEX are the most popular among the traders. If you want to trade in the commodities like metal, energy, etc., you can trade through MCX and if you want to trade in agricultural commodities, you can trade through NCDEX. ICEX is known for trading in Diamond.The commodities in India can be classified into three major categories. They are as follows: Agriculture – Maize, Soya, Spices, Pulses, Fibres, Rice, Wheat, Guar, Castor, etc. Metals – Gold, Silver, Platinum, Aluminium, Copper, Lead, Nickel, Zinc, Steel, etc. Energy – Crude oil, Natural gas, etc. The above mentioned are the exchanges and types of commodities where you can invest your money. Let us now learn how to invest in commodities.How To Invest In Commodities In IndiaThe beginners entering the market always have the question in their mind,“how to invest in commodities in India?” In this section of the article, you will learn about the various ways through which you can make an investment in commodities. Invest In Physical Commodities The easiest way to invest money in the commodity market is by physically purchasing it. The purchase is made in the hope that the price of the commodity will rise and you will be able to sell it at a higher price. One of the best commodities to invest in India and hold it physically are precious metals like gold, silver, etc. Invest In Commodity Futures Market Futures contract allow the trader to buy or sell a commodity at a set date and at a set time through contracts. The futures contracts trading is for those people who want to play with the volatility of the commodity prices and make massive gains. Investment in Commodity Related Stocks To avoid the risks of future trading, you can purchase the shares of companies related to commodities. By investing in such stocks, you can take advantage of the commodity price movement and enjoy the returns in the form of price appreciation of the share price. Invest In Exchange Traded Funds Exchange Traded Funds (ETFs) are the funds that comprise of future contract and allow you to invest in them directly. ETFs can be traded just like stocks and you can hold them without the risk of holding any futures contracts. Invest in Mutual Funds No one in the market can tell you what a good time to invest in commodities is. To overcome this problem, you can start a systematic investment plan (SIP) in those mutual funds that deal in commodity related stocks. To invest in the commodity market through any of the commodity exchanges you need to open an account with the broker. In this section of the article, you will learn about how to open a commodity account.How to Open a Commodity Account The first step towards investing in the commodity market in India is opening an account with a exchange registered broker. The selection of the broker must be done with utmost care. Take the feedback from the people about their services and credibility. Select the broker that gives you the best services at the most affordable rates. The next step is to fill the account opening form with the commodity broker. Along with the form, submit the copies of necessary documents that are needed to open an account. The documents include PAN card, address proof, ID proof, income statement and cancelled cheque. After submission of the documents, the broker will carry out verification of the information submitted by you. On successful verification of the information, you will be provided with the account number and password. As soon as your commodity trading account is opened, you must deposit the margin money. The margin money is equivalent to 5% to 10% of the contract value. After account opening, you can trade at any of the commodity exchanges. Let us learn about how you can trade on MCX, which is one of the most popular commodity exchanges in India. Trading on MCXJust like BSE and NSE provides you with the platform to trade in stocks, similarly, trading in the commodities market can be done on the MCX (Multi Commodity Exchange of India Ltd.). In fact, you can find the best commodities to invest in India on MCX. The MCX broker acts as an intermediary between the commodity exchange and commodity trader. On this exchange, you can trade in metals, energy and agricultural commodities. All you need to do is simply place the order with the broker over the phone or place it online using the mobile application. MCX was earlier regulated by Forward Market Commission (FMC) which later got merged with the Securities and Exchange Board of India (SEBI) in the year 2015.Commodity trading account is the primary requirement for making an investment in the commodities market. Whether you are a beginner or a seasoned investor looking to open a commodity trading account, you can consider IndiaNivesh Shares and Securities Pvt. Ltd. We advise our customers about the good time to invest in commodities, the best commodities to invest in, etc. Contact us to enjoy our hassle-free services.     Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

अधिक पढ़ें

Are you Investment ready?

*All fields are mandatory

related stories view all

  • Financial Markets - Overview, Structure, and Types

    What is Financial Market? A market is defined as a place where goods and services are bought and sold. Along similar lines, a financial market is one where financial products and services are bought and sold regularly. Financial markets deal in the purchase and sale of different types of investments, loans, financial services, etc. The demand and supply of financial instruments determine their price, and the price is, therefore, quite dynamic. Financial markets form a bridge between investors and borrowers. It brings together individuals and entities that have surplus funds and those who are in a deficit of funds so that funds can be transferred between them. This transfer of funds is done through different types of financial instruments that operate in the financial markets. Structure of the Indian financial market The Indian financial market is divided into two main types – the money market and capital market. The capital market is further sub-divided into different types of financial markets. Let's understand –   Let’s understand each type of financial market in details – Money market The money market is a marketplace for short-term borrowing and lending. Securities that have a maturity period of less than a year are traded on money markets. The assets traded in money markets are usually risk-free and are very liquid. Since the maturity period is low, the risk of volatility is low, and the returns are also low. Money market instruments are debt oriented instruments with fixed returns. Some common examples of money market instruments include Treasury Bills, Certificates of Deposits, Commercial Papers, etc. Capital market Contrary to the money market is the capital market, which deals in long-term securities. Securities whose maturity period is more than a year are traded on the capital market. Capital market trades in both debt and equity-oriented securities. Individuals, companies, financial institutions, NRIs, foreign institutional investors, etc. are participants of the capital market. The capital market is divided into two sub-categories which are as follows – Primary market Also called the New Issue Market, the primary market is that part of the capital market, which is engaged in the issuance of new securities. The newly issued securities are then purchased from the issuer of such securities directly. For instance, if a company offers an IPO (Initial Public Offering) and sells its shares to the public, it forms a part of the primary capital market. Investors directly buy the shares from the company, and no middlemen are involved. Similarly, if an already listed company issues more shares, called Follow-on Public Offerings (FPO), such shares can be bought by investors directly from the company. Secondary market The secondary capital market is where the securities bought in the primary capital market are traded between buyers and sellers. Stock trading is a very common example of a secondary capital market wherein investors sell their owned stocks to interested buyers for a profit. A secondary market is characterised by an intermediary and the trading of securities takes place with the help of such intermediary. While securities in the primary market can be traded only once, securities in the secondary market can be traded any number of times. The stock exchange is a part of the secondary market wherein you can trade in stocks of different companies that have already been offered by the company at an earlier date. Other types of financial markets Besides the above-mentioned types of financial markets, there are other types of financial markets operating in India. These include the following – Commodity market This market deals in the trading of a commodity like gold, silver, metals, grains, pulses, oil, etc. Derivatives market Derivative markets are those where futures and options are traded. Foreign exchange market Under a foreign exchange market, currencies of different countries are traded. This is the most liquid financial market since currencies can be easily sold and bought. The rate fluctuations of currencies make them favourable for traders who look to book profits by buying at a lower rate and selling at a higher one. Bond market Bond market deals in trading of Government and corporate bonds, which are offered by Governments and companies to raise capital. Bonds are debt instruments that have a fixed rate of return. Moreover, bonds also have a specific tenure, and the bond market is, thus, not very liquid. Banking market The banking market consists of banks and non-banking financial companies which provide banking services to individuals like the collection of deposits, the opening of bank accounts, offering loans, etc. Financial market and services The services offered by financial markets today are as follows – They provide a platform for buyers and sellers to trade on financial products The financial market determines the price of financial instruments traded on it. This price is based on the demand and supply mechanism of the instrument and can move up and down frequently The market provides liquidity to investors when they need to sell off their investments for funds The market provides funds to borrowers when they need financial assistance The Indian financial market is influential in the economic growth of India as a whole The financial market helps in mobilization of funds from investors to borrowers Thus, the financial market and its services are varied, and that makes the financial market an important component of the Indian economy. Regulators of financial markets Financial markets and services offered by them should be regulated so that the participants of the market follow the laws of trading. As such, there are different regulators of the market that ensure that all participants trade fairly. These regulators are as follows – Reserve Bank of India RBI is the regulator for banks and non-banking financial companies. It is the central bank of India entrusted with the formulation of monetary policies, credit policies, and foreign exchange policies, among others. Banks and financial institutions have to abide by RBI's rules and regulations to work in the financial market. Securities and Exchange Board of India SEBI is the primary regulator of the capital market, which consists of both the primary as well as the secondary capital market. Trading done in the capital market is governed under SEBI's rules and laws. Insurance Regulatory and Development Authority IRDA governs the rules and regulations which are to be followed by insurance companies and their intermediaries. Thus, IRDA is a regulator of the insurance market, both life, and general insurance market. Financial markets today have evolved and have become quite competitive with the participation of multiple players. They directly play a part in the growth of India's economy and allows investors and borrowers to trade in financial products and services in an easy and smooth manner. To take advantage of the Financial markets and varied investing opportunities, consider the team at IndiaNivesh, which is well-versed with types of markets and regulatory bodies.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

    read more
  • SIP – Different Types of Systematic Investment Plans in India

    Mutual funds now are a household name and building a mutual fund portfolio is synonymous with wealth creation. As the mutual fund industry continues to grow leaps and bounds, SIPs are considered one of the key growth drivers for this industry. SIPs help the investors to invest in a systematic and disciplined manners. Online SIP investments starting with Rs 500 per month (for few schemes min SIP amount is as low as Rs. 100 per month); digital distribution and hassle-free onboarding of investors, all have resulted in making an investment for SIPs most favoured investment option. To stay relevant with times and improvise their offerings, AMCs now offer many different types of SIP so that investors can choose the most suitable type of SIP for investment best suited to their individual needs and profile. Here are the different types of SIP investment available for investors- 1. Regular SIP One of the simplest and easiest forms of SIP investment is a regular SIP, wherein you invest a fixed amount at regular intervals. The time interval can be monthly, bi-monthly, quarterly or semi-annually. You can also choose daily or weekly SIPs, though it is not recommended in most cases. When you make your first SIP payment, you are required to choose your desired time interval, amount of the SIP and the tenure of the SIP. In a regular SIP, you cannot change the amount during the tenure of the investment. If you are a salaried employee, choosing a monthly SIP, usually in the first ten days of the month, once your salary is credited to your bank account is highly recommended. 2. Step-up SIP Without a doubt, SIPs help brings about financial discipline in your life. Over time, as your earnings increase, it is important to increase your investments as well so as to keep them aligned with your income level and financial goals. A step-up SIP, also termed as a top-up SIP, is an automated solution to increase your SIP contribution either by a fixed amount or a fixed percentage after a specific time. Using Step-up SIPs will help you reach achieve your goals faster and also help in long-term wealth creation. 3. Flexible SIP For investors with irregular income, even after being well aware of the benefits of SIPs, the biggest reason for not starting a SIP is not being able to keep up with the fixed periodic investments. A flexible SIP is a perfect solution for such investors as it gives the flexibility to start, pause, decrease or increase your SIP. Depending on your flow of funds, you can change the SIP amount seven days before the SIP date. In case, there is no intimation of change, then the default amount entered is deducted for the SIP. 4. Perpetual SIP Normally, when you choose a regular SIP, it has a fixed tenure, with a starting date and an end date. But, if you are unsure about how long you want to continue the SIP, you can opt for a perpetual SIP. In case of a perpetual SIP, you leave the end date column blank and you can redeem your SIP once you have reached your financial goal. If you opt for a perpetual SIP, then it is important that you monitor the returns of your investment, to keep a track of the fund’s performance over time. 5. Trigger SIP A trigger SIP is for seasoned investors, who have sound knowledge of the financial markets and are accustomed to tracking the market performance daily. Using a trigger SIP, an investor can choose an index level, a particular event or NAV to start the SIP. An investor can set trigger points for upside and downside conditions and can redeem the amount on achieving the pre-specified target. Investors can oscillate their investments between debt and equity schemes within the same fund house. A trigger SIP is recommended only for investors who have a thorough understanding of financial markets. 6. SIP with Insurance Insurance is an important part of financial planning. In order to make mutual fund offerings more lucrative, certain fund houses offer free insurance cover if you opt for SIPs with a longer duration. The initial cover is usually ten times the first SIP and gradually increases over time. This feature is only for equity mutual fund schemes. The term insurance offered is just an add-on feature and does not impact the performance of the fund. 7. Multi SIP The multi-SIP enables starting SIP investment in multiple schemes of a fund house through a single instrument. This facility can help investors to build a diversified portfolio. Investors can start SIP in various schemes using a single form and payment instruction, thereby reducing the paperwork involved.   CONCLUSION Over the last few years, SIP returns have earned investor confidence and are the most preferred investment option of retail investors. If you are unsure on how to choose the right SIP for you and want correct guidance, then consult our expert financial advisors at IndiaNivesh for best-suited SIPs for investments.

    read more
  • Know What is Pre-Market Trading & How it Works in Share Market

    Most of us are aware that trading takes place on the stock exchange between 9.15am and 3.30pm. But what if we told you that it is only partially correct. Some trading (though low in volume) also takes place during the extended trading hour periods. Read on to know about more about this additional trading window and its significance. What is Pre-Market Trading Pre-market Trading is a global phenomenon and refers to trading that takes place before the usual trading hours. The usual trading hours for Indian stock markets is 9:15 am to 3:30 pm. Pre-open market stock trading is a special trading window of 15 minutes prior to the start of the working hours for the stock markets. Hence, the time frame between 9:00 am and 9:15 am is considered as the pre-open market session. This feature was first introduced by NSE and BSE in October 2010. The objective behind a pre-market trading It was observed that there was tremendous volatility in the first couple of minutes of trading hours. The core objective behind having a pre-market trading session is to stabilise the market especially when heavy volatility is expected due to some overnight major events or corporate announcements. These could be election results, reforms or new economic policies, declaration of mergers and acquisitions, delisting of shares, open offers, change (especially downgrading) in credit ratings, debt-restructuring, market rumours etc. The additional 15 minutes allows the stock markets to arrive at the right premarket stock price and not get carried away by external events or announcements. In India, premarket future or options trading is not permitted. Pre-market Trading Session – Breakdown of the 15 minutes The premarket trading period can be further bifurcated into three slots:Order Entry or CollectionThe Order Entry session starts at 9:00 am and lasts for eight minutes. The following activities are undertaken during this timeframe Placing of orders for purchase or selling of stocks Changes or modification in orders Cancellation of orders After 9:08am (i.e. completion of order entry session), orders are not accepted by the stock markets Order MatchThe Order Matching session starts at 9:08am and continues for the next four minutes. The following activities are undertaken during this timeframe Confirmation of orders placed during the Order Entry session Order Matching Calculation of stock opening price for the regular session that starts at 9:15am During the Order Match session, one cannot buy, modify, cancel or sell their orders. Limit orders (i.e. order quantity and price is specified) are given priority over the market orders (order quantity and price are not specified) during the execution time. Buffer TimeThe last three minutes of the premarket trading session (i.e. 9:12 am to 9:15 am) is considered as buffer time. This period is used to ensure a seamless transition to regular trading hours. Any abnormalities from the previous two slots are addressed during this time.   Calculation of Opening price during the pre-market stock trading session The opening price of the stock during this session is determined during the second phase i.e. Order Match session. It is done with the help of a specific methodology. This calculation method is referred to as the call auction methodology or the equilibrium price. The stock price which corresponds to the maximum quantity of tradable shares is known as the equilibrium price. It is a factor of demand and supply. The orders placed during the first eight minutes are matched at the equilibrium price and then traded accordingly. Some scenarios: If the highest tradable quantity corresponds to two different stock prices, then the stock price with the lower unmatched orders is taken as the equilibrium price. For example:   Stock Price Order (Buy) Order (Sell) Demand Supply Max Tradable Quantity Size Unmatched Orders (Demand minus supply) 105 1275 1160 25000 20000 20000 5000 99 2000 8000 20000 30000 20000 -10000   Though the maximum tradable quantity is same in both the cases, the equilibrium price will be considered as 105 as it has a minimum unmatched order size If the values of the highest tradable quantity and unmatched orders are same or equidistant, but they correspond to two different stock price, then the above methodology cannot be applied. In this case, the equilibrium price is taken as the stock price which is closer in value to the closing price of the previous day. For example, Stock Price Order (Buy) Order (Sell) Demand Supply Max Tradable Quantity Size Unmatched Orders (Demand minus supply) 105 1275 1160 25000 20000 20000 5000 99 2000 8000 20000 25000 20000 -5000 Assuming the closing price on the previous day was Rs. 110, then the equilibrium price in the above example will be Rs. 105.   What about orders that remain unmatched or are not traded in the pre-open session? Orders that are not traded or remain unmatched are carried forward to the general trading session. The opening price of these orders is determined in the following manner: Limit Orders i.e. orders wherein the price and quantity are already specified are carried forward at the same mentioned price Market Orders i.e. orders wherein the price and quantity are not specified are carried forward at: If the opening price was ascertained during the pre-open trading session but order not traded, then at the determined price If the opening price was not discovered, then they are carried forward at the previous day’s closing price   Stock Markets tend to be overwhelming for many investors. The concept of premarket trading can further compound the complexity level. However, as an investor, you should always remember that help is just around the corner. Professional experts like IndiaNivesh can help to simplify and demystify the entire process. The team at IndiaNivesh keeps a close eye on this Pre-market session to comprehend the mood and strength of the stock market. They track the pre-market stock prices and take the best decisions for your portfolio basis the market sentiments. Moreover, since they offer a wide range of services (broking, mutual funds, institutional equities, private equity, strategic investments, corporate advisory, etc.) they have a holistic view of the market and the economy. Their expert opinion can help you to amp up your investment game. You can read more about their offerings, vision and accomplishments on their website "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

    read more