04 August,2026 04:46 PM IST | Mumbai | mid-day online correspondent
Representational Image. File pic.
The Indian equity benchmark indices snapped their four-day streak on Tuesday, 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, according to news agency PTI.
The Sensex fell 210.08 points, or 0.27 per cent, to settle at 78,428.95. The Nifty pared its losses towards the later part of the day, declining 159.40 points, or 0.64 per cent, to end at 24,614.90.
In the initial trade, the benchmark indices were trading on a mixed note. The 30-share BSE Sensex had jumped 76.38 points or 0.10 per cent to 78,715.41 in early trade. The 50-share NSE Nifty had declined 185.35 points or 0.75 per cent to 24,588.85 during the morning trade.
"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. The significant gap between the 3:30 pm and 3:40 pm closing prices of Nifty stocks and the index, along with the divergence with Sensex, suggests that the new system is not functioning as intended, resulting in heightened price volatility. This has triggered forced square-offs of positions, particularly among retail investors, ahead of the 15 minutes blind derivatives window closing session," Vinod Nair, Head of Research, Geojit Investments said.
"These appear to be initial teething issues in the new system and the exchanges and market regulator need to address the discrepancies. Currently, the impact is limited to the F&O segment of trading stocks and main indices. Importantly, these are not fundamental structural concerns and are likely to be brought under control. The broader economic and financial outlook remains solid and does not alter the view of long-term investors. The current volatility is expected to reverse as the exchanges return to their normal operating structure," he added.
On Monday, due to the CAS mechanism, the benchmark indices ended with an aberration. The Sensex surged 544.39 points, or 0.70 per cent, to settle at 78,639.03 while the Nifty gained 390.70 points, or 1.60 per cent, to end at 24,774.30.
From the Sensex pack, Trent, Bajaj Finance, Bharat Electronics, Tata Steel and Mahindra & Mahindra were among the winners, while Hindustan Unilever, NTPC, HDFC Bank, Reliance Industries, InterGlobe Aviation and Tech Mahindra were among the laggards.
"Crude oil prices rose nearly 2.5 per cent to around USD 85 per barrel as uncertainty over a diplomatic resolution to the US-Iran conflict persisted and disruptions to key global shipping routes continued," Siddhartha Khemka Head of Research, Wealth Management, Motilal Oswal Financial Services said.
Brent crude, the global oil benchmark, climbed 2.49 per cent to USD 85.86 per barrel, while in Asian markets, South Korea's KOSPI, Japan's Nikkei 225 ended higher, while Hong Kong's Hang Seng index settled lower, according to PTI. Foreign Institutional Investors (FIIs) bought equities worth Rs 922.26 crore on Monday, the news agency said.
"Fundamentally the market participants remain focused on developments surrounding the Strait of Hormuz, as greater clarity and stability in the region could help ease crude oil prices and support a moderation in global bond yields. Meanwhile, the ongoing RBI policy meeting is being closely monitored amid global uncertainties and inflation concerns. Investors are looking for policy measures from the RBI to address these challenges, along with liquidity support for the banking system, which could help sustain market confidence in the near term," Nair added.
(With inputs from PTI)
