The benchmark recovered most of the decline but renewed scrutiny of India’s new auction-based closing system.
India’s BSE Sensex briefly plunged about 3% during a 20-minute closing auction on Thursday, intensifying concerns about thin liquidity and possible manipulation during the newly introduced closing-price window.
The 30-stock index fell to 74,983.19 points, or 2.9% below its level at the end of continuous trading at 3:15 p.m., according to exchange data. It recovered nearly all of the decline and closed 0.7% lower.
The auction-based mechanism, introduced earlier this month for more than 200 stocks, has faced criticism after unexplained benchmark swings. India adopted the system to align its markets with global standards and curb price rigging.
A 75,000-strike Sensex put option expiring Thursday rose 4,800% during the auction before giving back its gains by the close. The move was linked to orders in an index-heavy stock reaching the 3% lower limit allowed under the mechanism.
