Mumbai: The Nifty stunned investors on Monday by surging more than 200 points after the cash market’s regular trading session ended, with the sharp move driven not by fresh buying but by SEBI’s newly implemented Closing Auction Session (CAS) framework for F&O-eligible stocks.
While continuous trading in the cash market concluded around the 24,573 level at 3:15 pm, the benchmark’s official closing price was discovered at 24,774.30 through the closing auction process.
As a result, the Nifty settled 390.70 points, or 1.6 per cent, higher for the day. The Sensex also ended with gains of 544.39 points, or 0.7 per cent, at 78,639.03.
The sharp rise after the end of regular trading did not indicate a sudden bout of buying activity.
Instead, it reflected the impact of the new auction-based price discovery mechanism introduced by the market regulator.
Under the revised framework, continuous trading in F&O-eligible stocks now ends at 3:15 pm, following which exchanges conduct a 20-minute Closing Auction Session.
During this period, buy and sell orders are collected and matched to determine a single equilibrium closing price.
The process includes various phases such as a transition period, order collection and final matching before the official closing price is published.
The change had a direct impact on the Nifty because the index is calculated using the closing prices of its constituent stocks.
Several heavyweight companies, including Reliance Industries and ICICI Bank, recorded auction-discovered closing prices that were higher than their last traded prices at 3:15 pm.
Since the Nifty is a free-float market capitalisation-weighted index, price movements in heavyweight stocks such as Reliance Industries, HDFC Bank, ICICI Bank, TCS, Infosys and ITC can have a substantial influence on the benchmark’s final closing level.
Even modest gains in these constituents during the auction session helped lift the index sharply above its pre-auction level.
The derivatives market continued to trade until 3:40 pm under SEBI’s revised framework. As the mechanism was introduced only on Monday, market makers and arbitrageurs were still adapting to the new structure, which may have temporarily widened pricing gaps between the cash market and derivatives segment.
(IANS)
