Stock Market Timings To Change From August 3 As SEBI Introduces Closing Auction Session For F&O Stocks

Trading hours for Futures & Options (F&O)-enabled stocks will change from August 3, 2026, as India's stock exchanges introduce a new mechanism to determine their official closing price.

The Securities and Exchange Board of India (SEBI) has introduced a Closing Auction Session (CAS) for stocks that have F&O contracts. The new system replaces the Volume Weighted Average Price (VWAP) method currently used to calculate the closing price for these securities.

There is no change for stocks outside the F&O segment. They will continue to trade until 3:30 pm, and their closing price methodology will remain the same.

Trading Hours To Change For F&O Stocks

Cash market trading in F&O stocks will end at 3:15 pm, 15 minutes earlier than at present. It will be followed by a Closing Auction Session that will continue until 3:35 pm.

Stock and index derivatives, however, will trade for another 10 minutes and close at 3:40 pm. The post-close session in the cash market will continue from 3:50 pm to 4 pm, during which trades are executed at the official closing price.

Why Is SEBI Introducing A Closing Auction?

The closing price is used across the market. It forms the basis for benchmark indices such as the Nifty 50 and Sensex, is used to calculate the net asset value (NAV) of mutual funds and exchange-traded funds (ETFs), settles F&O contracts and is used for portfolio valuation.

So far, the closing price has been based on the VWAP of trades executed during the final 30 minutes of continuous trading. This means the official closing price can differ from the last traded price if a large part of the trading volume is executed at different levels during that period.

SEBI said the auction-based mechanism is intended to improve price discovery by ensuring the closing price better reflects overall market consensus.

Closing Auction Timeline

Once regular trading ends at 3:15 pm, eligible F&O stocks will move into the auction session. Buy and sell orders will be collected first and then matched at a single equilibrium price—the level at which the maximum number of shares can be traded. That equilibrium price becomes the official closing price.

The VWAP of the last 15 minutes of trading will be used as the reference price, and a 3% price band will apply to auction orders.

From 3:15 pm to 3:20 pm, fresh orders cannot be entered. Stop-loss, iceberg and disclosed-quantity orders, along with orders outside the permitted price band, will be cancelled.

Between 3:20 pm and 3:25 pm, investors can place, modify or cancel market and limit orders, although no trades will be executed during this period.

From 3:25 pm until order entry closes, only limit orders can be placed or modified. Market orders already submitted cannot be changed. Order entry will stop at a random time between 3:28 pm and 3:30 pm to reduce the possibility of last-minute order flooding.

Matching of all eligible orders will take place between 3:30 pm and 3:35 pm, after which the equilibrium price will be published as the official closing price.

Why SEBI Is Introducing The New Mechanism

SEBI said the framework is aimed at improving price discovery and bringing Indian markets closer to practices followed by exchanges such as the New York Stock Exchange and the London Stock Exchange, both of which already use closing auctions.

The mechanism will initially apply only to F&O stocks, although SEBI has said it may be extended to more securities at a later stage.

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