Clearing the air over the recent divergence in the closing levels of the benchmark Nifty and Sensex, regulatory sources have confirmed that the newly implemented Closing Auction Session (CAS) framework functioned exactly as intended, attributing the outcome entirely to natural market dynamics.
Sources close to the regulator emphasised that the final market closing numbers were purely driven by market forces and reflected the actual demand-supply gap in the system. They firmly dispelled rumors of any “technical issue” or operational glitch at the exchanges.
Notably, India’s stock market saw an unusual divergence between the Nifty 50 and Sensex on Monday after SEBI’s new Closing Auction Session (CAS) framework came into effect for eligible stocks. The Nifty closed at 24,774.30, up 390.70 points, or 1.60%, while the Sensex gained 544.39 points, or 0.70%, to 78,639.03.
Regulatory sources told NDTV Profit that the CAS circular has been implemented as intended. They said the final market closing numbers were purely driven by market forces and reflected the demand-supply dynamics during the auction. The outcome was a function of the demand-supply gap and not any technical issue.
Also Read: Nifty’s 200-Point Spike: How SEBI’s New Closing Auction Rules Triggered Last 5-Min Surge
This explains why the Nifty’s official closing level differed sharply from its 3:15 pm level. Since the Nifty derives its value from the closing prices of its constituents, changes in heavyweight stocks can have a significant impact on the index.
Market participants may need some time to fully adjust to the new framework, particularly as the first session creates a new price-discovery process around the close.
Phase 1 of CAS covers only cash-market stocks that have derivatives, while non-F&O stocks continue under the existing structure. SEBI has planned a phased rollout, with more stocks likely to be brought under CAS over time.
The Nifty-Sensex divergence on the first day therefore reflects the transition to a new closing-price mechanism and the demand-supply forces emerging through the auction, rather than a technical malfunction.
Market participants may need time to fully adjust to the new framework. The change concentrates price discovery into the closing auction, which can produce larger movements when institutional or other sizeable orders are matched during the session.
Also Read: Stock Market Highlights: Nifty Ends Above 24,750, Sensex Ends Nearly 550 Points
Essential Business Intelligence,
Sharp Market Insights,
Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
