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Informist, Monday, Aug. 3, 2026

 

By Gopika Balasubramanium

 

MUMBAI – Dalal Street was left puzzled by the divergence between the closing levels of the Nifty 50 and the Sensex after the prices were determined under the new closing auction mechanism for the equity cash segment. There was also a disconnect between the Nifty 50 index and its futures contract at the close on Monday, leaving traders and analysts searching for an explanation. Market participants, however, said the outcome appeared to be market-driven rather than the result of any glitch at the exchanges. Some attributed the divergence to thin liquidity during the inaugural closing auction. The Street will closely watch Tuesday's session for greater clarity on how the new closing mechanism functions.

 

Stock exchanges on Monday implemented the new closing auction mechanism for the equity cash segment, applicable to stocks in which futures and options trading is permitted. Under the new rules, the continuous trading session ends at 1515 IST for these selected stocks, and the closing auction session runs between 1528 IST and 1530 IST. The price band during the closing auction session is capped at 3?ove or below the stock's reference price.

 

This differs from the earlier method of discovering the closing price through a volume-weighted average of trades executed during the last 30 minutes of the continuous trading session. The framework for orders and trades in the rest of the listed stocks in the equity cash segment remains unchanged and their trading session continues as usual until 1530 IST.

 

"So the normal trading is going to stop at 3 PM (1500 IST), as far as F&O (futures and options) stocks are concerned and the other stocks are going to be traded throughout and even the derivatives also," Uday Tardalkar, an independent corporate consultant and trainer, said. "So, people have actually mistaken that whether there is any problem with the exchange, there is no problem with the exchange," Tardalkar said.

 

"And the random price is derived from the reference price between 3.15 and 3.30 PM (1515-1530 IST)... Now, it's a different ballgame when you start at 3.15 (1515 IST), basically," he added. "And there has to be a, what we call, a rear or a divergence between the two, the cash and the future," Tardalkar said. "Today it was a shocker for some people because of the difference. Tomorrow it may not happen because of the expiry. But it will take time for people to understand, basically," he added.
 

Monday, when the continuous trading ended, the 50-stock index had ended at 24573.35 points, up 0.8% from Friday. Post the closing auction session, the index ended at 24774.30 points, up 390.70 points or 1.6%. There is a substantial difference of 200 points between the two levels. However, this was not the case with the BSE Sensex. At 1515 IST, the BSE Sensex had ended at 78677.13 points and the final closing level post the closing auction was at 78639.03 points. The difference was minimal. 

 

"I spoke to various brokers and most of them are clueless," an equity trader with a small-sized bank said. "The band of plus/minus 3% (price band) seems to be an issue," the dealer said. "One broker said all major buyers had put a market order and sellers were on limit order (which may have led to the disparity)," he added.

 

Experts said the anomaly in the Nifty 50's closing level is purely market-driven and not a technical problem. "The purpose of the closing auction is to prevent stocks from moving sharply at the time of close unless there is some change in the fundamental information about the company or there is a huge order for the stock during the auction session and there is no supply," Venkatachalam Shunmugam, partner at MCQube said.

 

"In today's case, it could be that more institutions came in to buy, less to sell, which makes the case for buying how much ever they can using market orders, knowing well that will be the price that will go into closing index calculation and so they will have least tracking error. So, looking at the demand-supply imbalance, the market would have priced it higher, which led to the disparity, rather than a technical problem," he added. 

 

While some analysts expect the National Stock Exchange to explain the disparity between the levels, others await Tuesday's session to get a clearer picture. This comes after the stock exchanges implemented the new closing auction session for the equity cash segment, which is limited to stocks in which futures and options trading is permitted and Monday was the first day. "I guess the exchange will clarify," Jigar Patel, senior technical and derivatives analyst at Anand Rathi Shares & Stock Brokers Ltd., said. For Tuesday, the index will find support at 24500-24400 points and face resistance at 24800-25000 points. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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