CASE: If a person short for about say 20000 quantities as a cover order, (and thus the short order takes up all the 5 entries in the bid).
what will be the result of this? Will the price of the stock suddenly fall to the 5th bid entry price? since the last LTP executed is 5 bid price?
Yes, you are right, and one more thing we need to consider here is some orders might have disclosed qty which is not shown in the snap quote, and it is not shown anywhere else.
You might get a fill at the 5th Bid Price or might be at the 2nd Bid price.
what is disclosed qty ? can you explain in detail
that is why most traders choose volume stocks, because of congested market depth.