The Nifty 50 jumped 1.6% to close at 24,774.30, while the BSE Sensex rose 0.7% to end at 78,639.03.
The difference came on the same day that stock exchanges introduced a new way of deciding the official closing price of stocks that have futures and options (F&O) contracts.
What changed in the closing price calculation?
Earlier, the closing price of these stocks was decided by taking the average price of all trades between 3 pm and 3:30 pm.
From Monday, exchanges have introduced a Closing Auction Session (CAS) for these stocks.
Under the new system:
- Normal trading in F&O stocks ends at 3:15 pm.
- The exchange then calculates a reference price based on trades between 3 pm and 3:15 pm.
- For the next 20 minutes, investors can place buy and sell orders in a special auction.
- The exchange matches these orders and the price at which the maximum number of shares can be traded becomes the stock’s official closing price.
In simple terms, instead of taking an average of late afternoon trades, the exchange now gives investors a final opportunity to place orders and lets demand and supply decide the closing price.Also read: Market closes at five-month high: 5 key reasons behind today’s surge in Sensex, Nifty
Why does the closing price matter?
The closing price is not just a number on the screen. It is used for calculating daily gains and losses in the futures and options market.
The new system currently applies only to stocks that have listed F&O contracts. Orders placed during the auction must be within a 3% range above or below the reference price.
While the sharp difference between the Nifty and Sensex coincided with the introduction of the new closing auction mechanism, exchanges have not confirmed whether the two events were connected.
