Mumbai: Stock market benchmark indices Sensex and Nifty closed lower Tuesday, ending their four-day rally, following the introduction of a new auction mechanism for shares having futures and options (F&O) contracts.
The Closing Auction Session (CAS) in the equity cash segment became operational on Monday, introducing a new auction-based mechanism for determining the closing prices of eligible stocks in a move aimed at making the price discovery process more transparent and robust.
Market benchmarks traded on a mixed note in the early session Tuesday following the introduction of the new auction mechanism.
Paring early gains, the 30-share BSE Sensex declined 210.08 points, or 0.27 per cent, to settle at 78,428.95. During the day, the benchmark hit a high of 79,143.15 and a low of 78,211.87, gyrating 931.28 points.
After trading in the negative territory throughout the day, the 50-share NSE Nifty dropped 159.40 points, or 0.64 per cent, to end at 24,614.90. During intraday trade, it edged lower by 346.35 points, or 1.39 per cent, to hit a low of 24,427.95.
Benchmark equity indices Sensex and Nifty Monday ended with an unusual aberration after stock exchanges introduced the new auction mechanism.
Generally, movement in both the benchmark indices is in sync with each other.
“The introduction of the Closing Auction Session (CAS) for F&O stocks has added a new layer of volatility to benchmark indices, with Tuesday’s trade reflecting an early adjustment to the revised market structure. After Monday’s auction lifted closing prices in several index heavyweights, investors spent much of today’s session recalibrating positions as prices gravitated back toward levels established during continuous trading,” Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Analyst firm, said.
The resulting adjustment has been more evident in the Nifty than in the Sensex, as stocks most influenced by the new auction mechanism witnessed relatively sharper profit-taking, he said.
“The divergence appears to reflect market mechanics rather than any meaningful change in underlying fundamentals,” Radhakrishnan added.
Extending the winning momentum to the fourth day on Monday, the Sensex jumped 544.39 points, or 0.70 per cent, to settle at 78,639.03. The Nifty climbed 390.70 points, or 1.60 per cent, to end at 24,774.30.
“Tuesday’s weekly expiry, combined with the implementation of the new mechanism for determining F&O closing prices, has led to a distortion in market trends,” Vinod Nair, Head of Research, Geojit Investments Limited, said.
From the Sensex pack, Hindustan Unilever, NTPC, HDFC Bank, Reliance Industries, InterGlobe Aviation and Tech Mahindra were among the laggards.
Trent, Bajaj Finance, Bharat Electronics and Tata Steel were among the winners.
Brent crude, the global oil benchmark, climbed 2.49 per cent to USD 85.86 per barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs 922.26 crore on Monday, according to exchange data.
In Asian markets, South Korea’s KOSPI, Japan’s Nikkei 225 and Shanghai’s SSE Composite index ended higher, while Hong Kong’s Hang Seng index settled lower.
Markets in Europe were mostly trading in positive territory. US markets ended sharply higher on Monday.
