Brief note on NSE index lot size and its determinations in Indian stock market

What does the terminology Lot size indicate?

In the share market, exchanges such as the National Stock Exchange and other regulatory bodies fix a specific quantity for a financial instrument and this quantity comes to be known as a lot.

In the case of securities that are exchange-traded, a lot also means that it is the minimum possible quantity of that instrument for which trade can be done.

In a intense manner, the number of stocks that can be bought or sold in one single transaction comprise of one lot. In options trading, the total number of contracts that can be contained in one picky derivative security can be said as one single lot.

A brief on the determination of Lots and their Importance

Lots are helpful and sizeable for the Indian stock market as and when all financial instruments are separated into lots, it turns into exceptionally easy and contented to carry out consistency of price quotes.

Therefore, investors in the equity market are very well aware of the total number of units bought by them in the case of each and every contract. This also helps them completely analyze the price that is being paid by them for each and every unit. This consistency is significant in making the trading and valuing options much more simple, swift and accurate.

For instance, Equity options can have a price of some picky value which permits each lot or contract to represent rights for 80 common stock shares.

In a specific talk about a transaction involving stocks, 100 shares are taken as the standard or regular size of the lot.

When a transaction takes place for a number of shares which is less than 100, those lots are known as odd lots.

It is imperative to determine the lot size sufficiently and base all your transactions on this particular lot size.

National exchanges are usually the ones setting the lot size, and all the traders pursue these pre-set standards for their diverse trading activities.

NSE index lot size

Derivatives on Individual Securities