India’s stock market is set for a notable shift from August 3, 2026. The National Stock Exchange will move to a Closing Auction Session (CAS) for select stocks and will also extend trading in equity derivatives to 3:40 PM. As per the bourse, the change is meant to improve how the market discovers the final closing price. However, there is dissent.
The new system will mainly apply to stocks that have active F&O contracts. For these shares, the official closing price will no longer depend on the last half-hour of continuous trading. Instead, it will be discovered through a separate auction window.
As of now, closing prices of a stock in Indian capital markets are decided based on the volume-weighted average price of trades during the last 30 minutes.
How does the new closing work?
The CAS will run from 3:15 pm to 3:35 pm. It will begin with a transition phase, followed by order entry, and then price discovery through auction matching. The exchange has said that order entry in the cash market will close randomly between 3:28 pm and 3:30 pm.
For stocks with derivative contracts, the new system will apply first. Other cash market stocks will continue with the existing closing methodology as of now.
The derivatives market will also see a timing change. Equity derivatives will now close at 3:40 PM instead of 3:30 PM. NSE says this is to align cash and derivatives more smoothly as the auction-based close takes over.
– Stocks in F&O category: Trading closes at 3:15 PM.
– All other stocks: Trading closes at 3:30 PM.
– Index and stock F&O contracts: Trading will close at 3:40 PM.
It is to be noted that there are no changes in market opening time.
Nithin Kamath sees two major problems with new structure
Zerodha’s co- founder, Nithin Kamath, criticised these steps and said that this will probably wipe 1-5% of its brokerage income.
Kamath said that the change will create two problems. First, passive funds tracking indices need to execute large orders near the end of the day to match the closing price. These orders can move prices while they are being executed, increasing tracking error.
Second, large orders placed in the final few minutes can disproportionately influence the closing prices of stocks and, in turn, the indices they are part of.
“There have been concerns that this can be used to push indices towards certain closing levels. Since CAS pools all orders and matches them at a single price, influencing the close becomes harder,” he said.
Also, this will create friction as it will be hard to explain why different parts of the market now appear to close at different times, he added.