Capital market stocks close 1% higher at 5,420 on CAS mechanism hopes
Indices gained after the market regulator proposed changes to the Closing Auction Session framework. Industry experts cite erratic option premiums and past liquidity issues as the primary drivers of optimism.
Capital market stocks rose Friday after the market regulator released a consultation paper addressing the Closing Auction Session (CAS) mechanism. The Nifty Capital Markets index closed at 5,420, a gain of 1 percent from the previous close of 5,357.20. Major winners included Angel One, which jumped 4.8 percent, MCX up 3.3 percent, and BSE rising 3.1 percent. Manish Bhandari, CEO of Vallum Capital, stated that trader pushback regarding CAS-linked settlement pricing prompted the regulator's response. He noted that since August 3, settlement prints have been erratic, causing option premiums to swing 400 to 500 percent. The August 13 episode saw thin liquidity allow large orders to move prices sharply, leading to an interim order against two entities. Bhandari argued that a credible fix would restore confidence by delinking options settlement from the CAS closing price. Market participants expect the consultation paper to reduce reliance on the single CAS print, which is currently generating overhang of reduced trading volumes for capital market companies.
