Market Timings To Change From August 3 As Closing Auction Session Takes Effect

Trading hours for select equity and derivatives segments will change from August 3 following the rollout of the Closing Auction Session (CAS). As per the new guidelines, there will be different closing times for the F&O stocks as well as cash market stocks and F&O contracts, whereas no changes will be made in terms of the time of market opening.

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This new system is being implemented by the exchanges as per the new settlement system, which is meant to improve the system of determining closing prices and help in executing large institutional trades.

Revised Trading Hours From August 3

Under the updated schedule, trading in stocks that are part of the F&O segment will end at 3:15 pm. Stocks outside the F&O segment will continue trading until 3:30 pm, while trading in index and stock F&O contracts will conclude at 3:40 pm. There is no change to the market opening time.

For traders using the Market Intraday Square-off (MIS) product, brokers will also revise auto square-off timings. Equity positions in stocks covered under CAS will be squared off at 3:10 pm, while stocks outside CAS will have an auto square-off time of 3:20 pm. For index and stock F&O contracts, the revised auto square-off time will be 3:25 pm.

Why The Closing Auction Session Is Being Introduced

Explaining the change in a post on X, Zerodha co-founder Nithin Kamath said the Closing Auction Session is designed to improve price discovery and make the execution of large trades more efficient.

He noted that passive funds tracking benchmark indices generally place significant orders near the close of trading to match index closing values. These transactions may affect the price during the last minutes of trading, thus resulting in higher tracking errors for index funds and ETFs. A closing auction, where orders are matched at a single price, helps reduce this impact.

Kamath also said aggregating buy and sell orders into one auction makes it more difficult for large trades to influence the closing level of individual stocks or benchmark indices.

SEBI Says CAS Can Improve Price Discovery

Under the current system, the official closing price is calculated using the volume-weighted average price (VWAP) of trades executed during the Continuous Trading Session. According to SEBI, the Closing Auction Session replaces that process by pooling buy and sell orders submitted during the closing window and matching them through a single auction.

The regulator said this approach allows the closing price to reflect overall market demand and supply instead of trades executed at different moments before the market shuts.

Closing auctions are already used by several international exchanges, including the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE). With CAS becoming operational from August 3, India’s equity market will adopt a similar mechanism for determining official closing prices while seeking to improve the execution of large institutional orders.