NSE India Closing Auction Hits Record $4.2 Billion Volume

The National Stock Exchange of India processed a record $4.2 billion in stock trades during its closing auction on September 1. This volume, triggered by MSCI Inc. index rebalancing, was 33 times the daily average since the 20-minute auction system debuted on August 3.

Despite the record volume, the market faced significant instability. Approximately 60 stocks reached their 3% price limits, including Reliance Industries Ltd., Adani Enterprises Ltd., and Eternal Ltd. While the Nifty Bank Index ended the day 0.9% higher, it did so only after reversing an initial 0.2% loss.

Market participants and proprietary traders attribute the volatility to a lack of market makers. These firms have avoided the auction due to restrictions on shorting shares, which prevents the smoothing of imbalances between buyers and sellers. Analysts suggest that without these firms to provide liquidity, sharp price movements will continue regardless of the total trade volume.