The National Stock Exchange (NSE) introduced a new closing auction on August 3 to replace the old VWAP‑based system. The change aims to set a single equilibrium price at market close.
On Tuesday, the auction’s total turnover reached about ₹1,542.4 crore, a stark contrast to the ₹9.4 crore seen on the Bombay Stock Exchange. This high volume shows that large institutions are actively using the new mechanism.
Key names such as Infosys, ICICI Bank, Bharti Airtel and Reliance Industries were the most traded. Infosys closed at ₹1,167.50, up 0.83%, while ICICI Bank settled at ₹1,454.60, up 0.96%. Bharti Airtel finished at ₹1,970.10, a rise of 0.95%, and Reliance closed at ₹1,290.90, up 0.06%.
The auction format sets a single closing price, but traders note that gaps often appear between the 3:15 pm market price and the official close. These gaps are especially problematic on expiry days when derivative positions remain open until the market shuts.
Ashish Kyal of Waves Strategy Advisors warns that participation is still thin, leading to inefficient price discovery. He advises traders to avoid the auction until the system stabilises.
Sudeep Shah from SBI Securities recommends that traders close positions before 3:15 pm instead of taking new ones during the auction. He stresses that early sessions are a transition period, particularly for options traders.
The new system can turn a notional mark‑to‑market swing into a real expiry loss if the cash close moves sharply after 3:15 pm. This is a risk for short premium positions in same‑day options.
Market participants are watching whether the auction will broaden beyond a handful of large‑cap stocks and whether price discovery improves as institutional involvement deepens. Until then, the focus remains on how quickly the market adapts to the new closing mechanism.