The Indian stock market has been witnessing unpredictable late-day moves since the implementation of the new Closing Auction Session (CAS). The 20-minute auction, which replaced the earlier VWAP-based close, has been causing sharp price swings, leaving many investors and traders worried. Zerodha co-founder Nithin Kamath has weighed in on the issue, attributing the wild moves to structural weaknesses in Indian markets rather than flaws in the mechanism itself. While the new auction mechanism was introduced to ensure a fair and orderly close, its implementation has had unintended consequences.
Many options traders and algo desks have been incurring losses due to the unpredictable price movements. The Sensex and Nifty have also been affected, with the benchmark indices experiencing sharp volatility in the late trading sessions. The impact of the new auction mechanism on Indian investors cannot be overstated. Retail investors, who are already wary of the high volatility in the market, are likely to be further spooked by the sharp price swings.
As the market continues to grapple with the new auction mechanism, experts are calling for changes or a rollback to prevent further losses for traders and investors. As the market navigates this challenging period, one thing is clear: the stability of the Indian stock market is crucial for the growth of the economy.