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Nithin Kamath questions India’s closing auction as price swings persist
Zerodha CEO Nithin Kamath said closing auctions work best where liquidity and participant depth enable cash, futures, ETFs, and exchange prices to stay aligned.
Zerodha CEO Nithin Kamath said India’s new Closing Auction Session (CAS) is exposing structural weaknesses in how Indian market prices form, pointing to recent price dislocations.
According to LiveMint Markets, Kamath said the goal of closing auctions is better price discovery and smoother execution of large orders near the close, without abruptly moving prices.
He argued that closing auctions tend to function more effectively in markets with deep liquidity and a broad mix of participants, including market makers and arbitrageurs, who help reduce discrepancies across cash, futures, ETFs, and exchanges.
Kamath added that arbitrage is more limited in India, and while CAS may require technical tweaks, he said the bigger problem is that India’s markets are shallow and would need an ecosystem that draws in traders and investors with different time horizons.