NSE-BSE price gaps spark social media debate over new closing mechanism

Mumbai: The sharp divergence in benchmark and stock closing prices following the implementation of the Closing Auction Session (CAS) has triggered fresh debate among market participants, with investors taking to social media to question the reliability of end-of-day price discovery.

The new mechanism, introduced by the Securities and Exchange Board of India (SEBI), has led to noticeable differences in closing prices between the NSE and BSE. The debate intensified after the first few trading sessions under the new framework witnessed sharp divergences in official closing prices, leaving many investors confused and sparking widespread discussion on social media platforms.

According to reports, the strongest support for introducing the Closing Auction Session came from global passive investors. The reports added that foreign funds wanted India’s market structure to align with international practices, enabling investors to execute trades at the same prices used for benchmark index calculations and thereby reduce tracking error.

However, domestic institutions, brokers, traders and exchanges had expressed reservations during the consultation phase. They argued that Indian markets lacked the institutional depth and two-sided liquidity required for an auction-based closing mechanism to deliver efficient and reliable price discovery, the report stated.

However, the new framework has produced noticeable divergences in stock closing prices across exchanges. On Tuesday, Trent shares closed at Rs 3,070 on the BSE, up 1.15 per cent, while the stock ended at Rs 3,107.70 on the NSE, registering a gain of 1.89 per cent.

Similarly, Bharat Electronics Ltd (BEL) closed 0.94 per cent higher at Rs 392 on the BSE, whereas the stock ended 0.17 per cent lower at Rs 391.50 on the NSE. Bajaj Finance settled 1.06 per cent higher at Rs 1,153 on the BSE but finished 0.35 per cent lower at Rs 1,149 on the NSE.