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India indices diverge after new closing auction for F&O stocks
Nifty jumped 1.6% versus Sensex’s 0.7% as a near 200-point Nifty surge hit in the final two minutes, amid low auction participation and pricing gaps across NSE and BSE.
India’s two benchmark stock indices broke their usual pattern after the first day of a new Sebi-mandated closing auction session for futures and options stocks. LiveMint Markets reported that on Monday, the NSE Nifty rose 1.6%, while the BSE Sensex gained 0.7%, creating an unusually wide gap. The move followed the new closing auction mechanism for determining closing prices, which replaced the prior volume-weighted average price system. LiveMint Markets said the auction coincided with a nearly 200-point Nifty surge in the final two minutes of order closing, also widening discrepancies between the Nifty’s underlying stocks and their futures. The pricing gaps were attributed to low participation, particularly the absence of arbitrageurs who typically help eliminate differences between the same stock traded across exchanges. The outlet cited Reliance Industries as an example, with the stock’s NSE close at ₹1,319 versus ₹1,309 on the BSE, while an active NSE futures contract for Reliance ended at ₹1,314, ₹5 lower than the BSE close. Participation was also reflected in auction values, with total auction value of ₹1,276.2 crore on the NSE versus ₹10.8 crore on the BSE. A broking official told LiveMint Markets the low number of traders prevented arbitrage from closing the gap, and Crosseas Capital director Rajesh Baheti said the session showed demand and supply imbalance in the absence of a robust stock lending and borrowing mechanism, though a regulatory officer said the divergence did not look systemic and could settle as market awareness improves.
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