Tick Size

Tick size is the minimum price increment by which the price of a traded security can change. On NSE and BSE, the tick size for equity shares is INR 0.05 (5 paise). This means a stock trading at INR 100.00 can move to INR 100.05 or INR 99.95, but not to INR 100.02 - prices must move in 5-paise increments.

Tick size has practical implications for traders, particularly in low-priced stocks. For a stock trading at INR 5.00, a single tick movement of INR 0.05 represents a 1% price change - significant for both profit potential and Spread costs. For a stock trading at INR 5,000, the same tick is just 0.001% - effectively immaterial to trading decisions.

In the derivatives market on NSE, tick sizes differ by instrument. Index options (Nifty, Bank Nifty) trade in INR 0.05 increments. Stock futures also follow INR 0.05 ticks. Currency derivatives on NSE have a tick size of INR 0.0025 (0.25 paise). These small ticks in currency markets allow for fine-grained pricing given the narrow percentage moves in exchange rates.

Tick size affects Scalping profitability directly. With a minimum tick of INR 0.05 and a typical bid-ask spread of one tick (INR 0.05), a scalper needs the price to move at least two ticks (INR 0.10) in the trade's favour to cover the spread and produce a profit. In markets with smaller tick sizes, scalping becomes more viable because the spread-to-price ratio is smaller.

Globally, exchanges have debated optimal tick sizes - too large a tick inflates trading costs, while too small a tick can fragment liquidity across many price levels. India's INR 0.05 tick size has remained stable for many years and is generally considered appropriate for the price levels and liquidity profiles of most listed stocks.