Volatility in Indian equity markets has eased as traders and institutional funds adjust to a new closing auction mechanism introduced earlier this month.
The Nifty 50 index closed 0.05% higher on Thursday, a modest but stabilizing performance compared to the 0.01% gain recorded earlier in the week when the new rules first took effect.
The structural change, which began on August 3, was designed to reshape end-of-day trading dynamics and determine final settlement prices more efficiently.
However, the initial rollout triggered unexpected friction for derivative traders and institutional funds, who faced unforeseen stock delivery obligations during monthly option expiries.
These operational hiccups contributed to the heightened volatility observed in the first few days of the new regime.
According to Reuters, the market’s stabilization on Thursday signals that participants are beginning to adapt to the new auction method.