Markets Snap Four-Day Winning Streak, Sensex Falls 210 Points As New Closing Auction Triggers Volatility

Mumbai: Indian stock markets ended lower on Tuesday, snapping a four-session winning streak as investors adjusted to the newly introduced Closing Auction Session (CAS) for shares with futures and options (F&O) contracts.

The BSE Sensex declined 210.08 points, or 0.27 percent, to close at 78,428.95. During the session, it moved between 78,211.87 and 79,143.15, recording a wide intraday range of 931.28 points.

The NSE Nifty fell 159.40 points, or 0.64 percent, to settle at 24,614.90. It touched an intraday low of 24,427.95, down 346.35 points from the previous close.

New Auction Impact

The CAS became operational in the equity cash segment on Monday. It uses an auction-based process to determine closing prices of eligible stocks and is intended to improve transparency and price discovery.

However, the new system caused unusual movements in benchmark indices. Sensex and Nifty generally move in the same direction, but their gains differed sharply on Monday and the divergence continued on Tuesday.

Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said the new mechanism added volatility as investors recalibrated positions. Prices of several index heavyweights moved back towards levels seen during continuous trading.

He added that the adjustment was sharper in the Nifty because stocks affected by the auction mechanism saw heavier profit-taking.

Expiry Adds Pressure

Vinod Nair, Head of Research at Geojit Investments, said Tuesday’s weekly derivatives expiry, combined with the new F&O closing-price mechanism, distorted market trends.

Hindustan Unilever, NTPC, HDFC Bank, Reliance Industries, InterGlobe Aviation and Tech Mahindra were among the major Sensex laggards. Trent, Bajaj Finance, Bharat Electronics and Tata Steel ended higher.

Brent crude rose 2.49 percent to USD 85.86 per barrel. Foreign Institutional Investors purchased Indian equities worth ₹922.26 crore on Monday.

Asian markets ended mixed, while European markets mostly traded higher. US markets had closed sharply higher on Monday.