Tick Size in Indian Markets: The 2024 NSE Revision Explained

What Tick Size Actually Means

Tick size is the minimum amount by which the price of a security can move on an exchange. If the tick size of a stock is Rs 0.05, its price can be Rs 100.00, Rs 100.05 or Rs 100.10, but never Rs 100.03. Every bid and every offer in the order book must sit on a valid tick. This is not a suggestion or a convention, it is a hard rule enforced by the exchange matching engine, and an order placed at an invalid price is simply rejected.

The tick exists to keep the order book clean. Without it, traders could queue at Rs 100.001 ahead of someone at Rs 100.00 for a meaningless fraction of a paisa, and the book would fragment into thousands of near identical price levels. A sensible tick groups orders at a finite set of prices, which makes the market easier to read and faster to match. The trade off is that the tick also sets a floor on how tight the bid ask spread can ever be, so the size of the tick directly shapes your trading cost.

Most retail traders meet tick size without naming it. When you place a limit order and your platform snaps the price to the nearest Rs 0.05, that is the tick at work. When a stock seems to pause at round levels and jump in small fixed steps, that is the tick again. Understanding it turns a vague feeling about how prices move into a precise number you can put into a position sizing and risk plan.

The 2024 SEBI and NSE Reduced Tick Size Revision

The most important recent change, and the one most older guides get wrong, is the reduction of tick size to Rs 0.01 for lower priced stocks. For years NSE applied a flat Rs 0.05 tick to almost all stocks in the normal market. In 2024, following the broader review of market microstructure, NSE moved to a price based tick regime in the cash market. Stocks whose price sits below Rs 250 now trade in ticks of Rs 0.01, while stocks priced at Rs 250 and above continue to use the Rs 0.05 tick.

The logic is proportional fairness. A Rs 0.05 tick on a Rs 3,000 stock is about 0.0017 percent of price, almost invisible. The same Rs 0.05 tick on a Rs 30 stock is about 0.17 percent of price, which is enormous and forces an artificially wide minimum spread on exactly the stocks where retail volume is heaviest. By cutting the tick to Rs 0.01 below Rs 250, the exchange let the minimum spread on cheaper, highly liquid stocks fall to roughly the same proportion as on expensive ones, improving price discovery and lowering the hidden cost of crossing the spread.

A practical point for traders. Because the regime is price based, not name based, a stock can move between tick buckets. If a share that traded at Rs 230 with a Rs 0.01 tick rises through Rs 250, the exchange reclassifies it into the Rs 0.05 bucket at the next periodic review, so the tick on that same stock can change over time. Always confirm the live tick on the NSE contract or security master before you build a scalping or tight stop strategy around it, because a wrong assumption about the tick quietly breaks your spread and slippage maths.

Current Tick Sizes Across Indian Market Segments

Tick size is not a single number. It varies by segment and, in the cash market, by price band. The table below summarises the practical position for most actively traded instruments. Treat these as the working defaults and always verify the exact tick for a specific contract on the exchange, because special series and very low priced or illiquid scrips can carry their own rules.

Notice that for derivatives the tick is applied to the premium or the futures price, not to the underlying. A Nifty index level might be 23,500, but a Nifty option premium of Rs 142.30 moves in Rs 0.05 steps to Rs 142.35 or Rs 142.25. This is why the rupee value of a single tick in F&O depends on the lot size, which we work through next.

Tick Size Versus Lot Size, Do Not Confuse Them

New traders frequently mix up tick size and lot size, and the confusion is expensive. Tick size is the smallest price step. Lot size is the fixed quantity in one contract. They are completely separate rules set by the exchange. The tick tells you how far the price jumps. The lot tells you how many units you control. Your profit or loss per tick is the product of the two.

• Nifty 50 options and futures: lot size 65, premium tick Rs 0.05, so one tick on one lot is worth Rs 3.25.
• Bank Nifty options and futures: lot size 30, premium tick Rs 0.05, so one tick on one lot is worth Rs 1.50.
• FinNifty options and futures: lot size 60, premium tick Rs 0.05, so one tick on one lot is worth Rs 1.25.
• Sensex options (BSE): lot size 20, premium tick Rs 0.05, so one tick on one lot is worth Rs 0.50.
• A cash stock below Rs 250: there is no lot, you trade single shares, and one tick of Rs 0.01 on 1,000 shares is worth Rs 10.

Lot sizes are revised periodically by the exchange, while tick sizes change far less often. Confusing the two leads to wildly wrong position sizing. If you assume Nifty trades in lots of 50 when it is actually 65, your risk per trade is understated by nearly a quarter before you even count the tick. Always pin down both numbers for the exact contract month you are trading.

Worked Example, Bank Nifty Option Across Many Ticks

Numbers below are illustrative and chosen to show the mechanics, not to predict any outcome or promise any return. Suppose you buy 2 lots of a Bank Nifty 51,000 monthly call option at a premium of Rs 220.00. Bank Nifty lot size is 30, so 2 lots is 30 units. The premium tick is Rs 0.05, so one tick on your full position is Rs 0.05 multiplied by 30, which is Rs 1.50.

Now say the premium rises to Rs 268.00. That is a move of Rs 48.00, which is 48.00 divided by 0.05, equal to 960 ticks. Your gross profit is the price move times quantity, Rs 48.00 multiplied by 30, which is Rs 1,440. Equivalently, 960 ticks times Rs 1.50 per tick also gives Rs 1,440. The two ways of counting must agree, which is a useful check that you have the tick and lot right.

This gross figure is before costs. On the sell side of options, Securities Transaction Tax (STT) is 0.1 percent of the premium value. Your sell premium value is Rs 268.00 multiplied by 30, which is Rs 8,040, so STT on exit is about Rs 8.04. Add brokerage, which is often around Rs 20 per order on discount brokers, plus exchange transaction charges, GST on brokerage, SEBI fees and stamp duty on the buy side. A realistic round trip cost here might be in the region of Rs 60 to Rs 90, leaving a net profit of roughly Rs 1,350 to Rs 1,380 on this illustrative trade. The tick itself did not cost you anything, but it set the resolution at which your entry and exit, and your stop loss, can be placed.

How Tick Size Drives the Bid Ask Spread and Your Real Cost

The tick is the floor under the spread. The bid ask spread can never be tighter than one tick, because the best bid and best offer must sit on adjacent valid prices. For a Rs 250 plus stock with a Rs 0.05 tick, the tightest possible spread is Rs 0.05. For a sub Rs 250 stock after the 2024 change, the tightest possible spread is Rs 0.01, five times finer. Every time you cross the spread to get filled immediately, you pay roughly half the spread as a hidden cost, so a finer tick directly reduces that cost on cheaper stocks.

Consider a liquid stock trading near Rs 40. Before the 2024 revision, with a Rs 0.05 tick, the minimum spread of Rs 0.05 was about 0.125 percent of price. After the revision, with a Rs 0.01 tick, the minimum spread of Rs 0.01 is about 0.025 percent of price. On a Rs 2 lakh position that is the difference between a worst case spread cost of roughly Rs 250 and roughly Rs 50 on a single round trip. For active traders who turn over capital many times, this compounds into a meaningful saving over a month.

• Finer tick, tighter possible spread, lower cost to cross, better for scalpers and high frequency strategies.
• Finer tick can also mean thinner queues at each price, so a large order may walk through several ticks rather than fill at one level.
• Coarser tick concentrates liquidity at fewer prices, which can mean deeper size at the touch but a wider minimum spread.
• For a buy and hold investor the tick barely matters, the cost is paid once and dwarfed by other factors.

Why the Tick Matters More to Some Traders Than Others

Tick size is not equally important to everyone. A long term investor buying Reliance to hold for three years pays the spread once and the tick is a rounding error against the eventual return. A scalper who enters and exits a low priced stock fifty times a day pays the spread fifty times, and a five fold reduction in the minimum spread is the difference between a viable edge and a strategy that bleeds out on costs alone.

For options traders, the tick interacts with the lot to set your minimum meaningful move. On Bank Nifty with a lot of 30, one tick is only Rs 1.50 per lot, so the premium has fine granularity relative to position size. On Nifty with a lot of 65, one tick is Rs 3.25 per lot, coarser per unit of risk. This affects how tightly you can place stops. If you want a stop at a precise rupee loss, you can only hit valid tick prices, so your real stop will be at the nearest tick, slightly above or below your ideal level.

Systematic and algorithmic traders care most of all, because their models often profit from capturing a few ticks repeatedly. For them the tick is a core input, it defines the smallest unit of edge and the resolution of every signal. The 2024 reduction for sub Rs 250 stocks opened more room for such strategies in that price band, which is one reason the exchange and regulator weighed the change carefully against the risk of excessive churn.

Common Mistakes Traders Make With Tick Size

The errors below are not theoretical, they show up in real trading journals and cost real money. Each one comes from treating the tick as trivia rather than as a hard constraint on how orders behave.

• Assuming every NSE stock still uses a Rs 0.05 tick. After 2024, sub Rs 250 stocks use Rs 0.01, so a stop or limit placed on the old assumption may be rounded to a different price than intended.
• Confusing tick size with lot size and mis sizing a position. The tick is the price step, the lot is the quantity, and your risk per tick is the product of the two.
• Setting a limit order at an invalid price and wondering why it never appears in the book. The exchange rejects or rounds prices that are not on a valid tick.
• Ignoring the cumulative effect of the spread. One tick looks tiny, but crossing it on hundreds of trades a month is a major line item against your net profit.
• Forgetting that a stock can cross the Rs 250 boundary and have its tick reclassified, which silently changes the spread and slippage assumptions in a tight strategy.
• Treating tick savings as if they cut your tax. They do not. STT, brokerage and slab or capital gains tax are separate, and they usually dwarf the tick in your final number.

Practical Checklist Before You Trade an Instrument

Build the tick into your routine the same way you check liquidity and the spread. A two minute check before sizing a position saves you from broken stops and miscounted risk. The steps below work for both cash and derivatives.

• Confirm the live tick for the exact security or contract on the NSE or BSE security master, do not assume.
• For a cash stock, check whether it sits below or above Rs 250, since that decides Rs 0.01 versus Rs 0.05.
• For a derivative, note the premium or futures tick and multiply by the lot size to get the rupee value of one tick.
• Round your intended entry, stop and target to valid tick prices, then re check your risk in rupees on the rounded levels.
• Estimate your round trip cost, brokerage, STT, exchange charges, GST and stamp duty, and compare it against your expected edge in ticks.
• Record the tick and lot in your trading journal alongside the trade, so your post trade review uses the right numbers.

Sources and Further Reading

For the authoritative and current position on tick sizes, contract specifications and the 2024 cash market revision, refer to NSE India, SEBI and BSE India. Tick sizes, lot sizes, STT rates and tax rules are revised periodically, so always confirm the live numbers on the official source before you trade. The rupee figures in this guide are illustrative and are not a forecast or a promise of any return.

Sources and Further Reading

For authoritative data and further reading on this topic, refer to NSE India, SEBI (Securities and Exchange Board of India) and BSE India. Always confirm current rules, rates and contract specifications on the official source before you trade.