(Aug 3): India’s new system to discover end-of-day market prices got off to a confusing start, with traders trying to make sense of a spike in the NSE Nifty 50 Index stemming from the shift.

Starting Monday, the National Stock Exchange of India began holding a closing auction session to determine the day’s final prices for stocks with derivatives tied to them. That replaced the volume-weighted average price of trades executed in the final 30 minutes of the session.

The change aims to improve price discovery, curb manipulation and bring India’s market structure closer to that of global peers. Instead, the debut sparked confusion across trading desks, evoking reactions on social media.

“This upmove is essentially fake and will reflect as a gap down tomorrow morning, things remaining unchanged overnight,” said Mayank Bansal, a Dubai-based trader at a hedge fund that trades Indian derivatives.

The Nifty 50 closed 0.8% above the level it was trading at just before the auction began at 3.15pm local time (5.45pm Malaysia) while the BSE Sensex showed little comparable movement. The divergence prompted many market participants to question whether the new mechanism applied only to the NSE.

A spokesperson for the NSE did not immediately respond to a text message seeking comment.

“The close is bizarre, perhaps due to the thin volumes in the closing auction, and completely alters all expiry-day dynamics,” Bansal said. “If it continues to stay this far away from the 3.15pm level, one can expect a massive drop in expiry-day volumes.”

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