What It Means
Tick size is the minimum price increment by which a stock or contract's price is allowed to move on the exchange. A price can't move by any random amount; it has to move in multiples of the tick size set for that instrument.
How It Works
Most Indian equities trade with a tick size of ₹0.05, meaning a stock's price can only be quoted at values like ₹500.00, ₹500.05, ₹500.10, and so on, never ₹500.03. F&O contracts often use the same or a similarly small tick size. This matters most for limit orders: if you try to place one at a price that isn't a valid multiple of the tick size, the order gets rejected, and it's also why a stock's bid-ask spread can never be smaller than one tick, even on the most liquid names.
Commodity and currency contracts set their own tick sizes independently of equities, and they vary by instrument: MCX Crude Oil moves in ₹1 increments, MCX Natural Gas in ₹0.10, and MCX Gold in ₹1 per 10 grams, while USDINR currency futures on NSE tick in steps of just ₹0.0025. A smaller tick size means finer price discovery but also a tighter minimum spread; a larger one means the price jumps in bigger, more visible steps.