India’s New Closing Auction Faces First Major MSCI Test
A quarterly MSCI index reshuffle triggered about $4.1 billion in trades on India’s National Stock Exchange (NSE) during Monday’s closing auction, providing the first major test of the country’s newly introduced stock-closing pricing mechanism. The exchange said turnover during the roughly 20-minute auction was nearly 40 times the average since the system was launched earlier this month and accounted for 21% of cash-market volume.
The surge was driven by MSCI changes taking effect on September 1. MSCI added Laurus Labs, Lenskart, Adani Energy Solutions and Groww to its global standard index, while removing Balkrishna Industries, SBI Cards and Astral. The reshuffle also lowered the weight of Reliance Industries and raised the weight of Eternal, creating significant stock-specific buying and selling flows.
The auction produced sharp moves in several shares. Reliance Industries shifted from a 0.6% gain before the auction to a 0.8% decline at the close, while Adani Energy Solutions fell 10.4%. Eternal recovered from a 3% intraday loss to finish around flat, while SBI Cards gained 0.6% and Astral declined 0.7%. Market strategists said the volatility was largely contained to individual stocks, helped by foreign institutional investors’ familiarity with closing auctions in other global markets.
Pic Courtesy: google/ images are subject to copyright
