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Informist, Tuesday, Sept. 29, 2026

 

By Rajesh Gajra

 

MUMBAI – Turnover in the closing auction session in the cash market is expected to surge Tuesday as domestic and international passive funds reshuffle their portfolio to account for the latest semi-annual changes in Nifty 50, Nifty Next 50, and other Nifty indices that take effect post close of trading hours, according to market analysts. In order to minimise tracking error, passive funds carry out the trades to align their portfolios with changes in index composition and weightages at the end of the trading day, and given the availability of closing auction session on the stock exchanges, it is expected these will take place during that session which takes place from 1520 IST to 1530 IST.

 

A similar major index reshuffle exercise by international passive funds on the back of pre-announced changes in MSCI indices had led to the closing auction session turnover surging INR 397.18 billion on Aug. 31 on the National Stock Exchange of India Ltd., the largest since the launch of closing auction on Aug. 3.

 

Barring Aug. 31 and two more days this month, when more minor changes in MSCI indices took effect, the closing auction session has recorded very low volumes, with the average daily turnover at just around INR 12.50 billion on the NSE. On the BSE, the closing auction session volumes were further lower at around 1-4% of the NSE.

 

The closing auction session is only for around 210 stocks that are in the stock futures and options permitted list. The passive funds tracking Nifty indices will have to not just sell the outgoing stocks and buy the incoming ones but also add to existing index stocks whose weights in the index go up and reduce their holdings in those where the weights go down.

 

A report Friday by brokerage Nuvama Wealth Management Ltd.'s institutional equities division estimated the cumulative net inflow from passive funds into major Nifty indices' stocks to be the highest in BSE Ltd. at $594 million, or around INR 57.08 billion, followed by Vedanta Aluminium at $149 million, or around INR 14.32 billion, Adani Enterprises Ltd. at $72 million, or around INR 6.92 billion, and Polycab India at $64 million, or around INR 6.15 billion. The estimated cumulative net outflow from passive funds are highest for Wipro at $142 million, or around INR 13.65 billion, Indian Hotels at $94 million, or around INR 9.03 billion, Reliance Industries Ltd. at $90 million, or around INR 8.65 billion, Shree Cement at $63 million, or around INR 6.05 billion, and United Spirits at $62 million, or around INR 6 billion, as per the Nuvama report.

 

In terms of assets under management, the largest domestic Nifty 50 passive fund is SBI Mutual Fund's Nifty 50 ETF which had a corpus of about INR 2.14 trillion as on Aug. 31. This scheme has the largest corpus since it receives large investments from the Employees Provident Fund Organisation. The EFPO allocates around three-fourths of its equity investments into the SBI Nifty 50 ETF scheme. The scheme's investment value in Wipro, which is exiting the Nifty 50, was INR 9.69 billion as on Aug. 31. The fund manager for this scheme is expected to participate in Tuesday's closing auction session to re-align the scheme portfolio along the changes in composition and weightages of Nifty 50.  End

 

US$1 = INR 96.10

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

 

Edited by Akul Nishant Akhoury

 

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