BSE share price fell as much as 3% in Wednesday’s trading session the exchange acknowledged that the recently introduced Closing Auction Session has resulted in lower trading volumes.
BSE share price opened at ₹3,222.60 per share today, as compared to previous close of ₹3,242 on Tuesday. The stock reached an intraday low of ₹3,131.50 on 2 September.
What’s behind the plunge?
Introduced on August 3, the Closing Auction Session (CAS) is a short end-of-day auction where buy and sell orders are matched to establish a stock’s official closing price. Similar auction mechanisms are already in use across several Asian markets, including China, Taiwan, Hong Kong and South Korea.
“CAS has led to lower participations from HFT, proprietary accounts, retail traders. CAS participation needs to pick up,” the exchange was quoted as saying by ZEE Business.
The CAS replaced the earlier system, under which a stock’s closing price was determined using the average price of trades executed during the final 30 minutes of continuous trading. Regulators said the new mechanism was aimed at bringing Indian markets in line with global practices.
However, since its introduction, the CAS has resulted in notable price swings and divergences in benchmark indices. Liquidity during the roughly 20-minute auction has remained low and has been largely driven by institutional participants.
Exchange data showed that trades executed during the CAS accounted for less than 1% of total daily cash-market turnover. The volume was also less than one-third of the activity recorded under the previous closing-price methodology.
CAS is a mechanism that matches buy and sell orders at the end of a trading session to arrive at the closing price of eligible stocks, rather than basing it solely on transactions executed during continuous trading hours. According to NSE, the system is designed to bring greater transparency and fairness to the process of determining closing prices.
BSE share price trend
BSE share price trend has largely remained positive despite weak market sentiments. The stock has slipped 5.49% in a week and 14% in a month.
Furthermore, the stock has gained 19.60% on year-to-date (YTD) basis and 43.24% in a year.
Looking at the broader level, the stock has given multibagger returns of 737% in three years and 2,291% in five years.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
