What is closing price?
The closing price of a stock is the price at which shares close at the end of trading hours of the stock market. The closing price of a stock is determined through a Closing Auction Session (CAS), where buy and sell orders are matched in a dedicated auction at the end of the trading day to discover a single equilibrium price.
As per SEBI’s 2026 circular, the method for calculating closing prices is being changed through the introduction of a Closing Auction Session (CAS). Under this mechanism, the closing price is discovered through a dedicated auction at the end of the trading day, where buy and sell orders are matched at a single equilibrium price instead of relying only on last-minute trade averages.
What is adjusted closing price?
Adjusted closing price is the closing price of a stock that’s updated to reflect its value after accounting for corporate actions like dividends, stock splits, bonus issues, rights issues, and mergers. It is considered a more accurate reflection of a stock’s value.
Closing price vs Adjusted closing price
| Closing price | Adjusted closing price | |
| Purpose | Shows the market price on a specific day. | Shows the stock’s real growth and return over time. |
| Impact of corporate action | Remains unchanged even if dividends or splits occur. | Adjusted automatically to maintain the true value after dividends, bonuses, or splits. |
| Price fluctuation | Prices may alter daily based on market activity. | Price changes only when a corporate event affects the stock. |
| Example | If the weighted average is ₹1,000, then that is the closing price | If a 1:1 bonus is issued, the adjusted closing price becomes ₹500 for past data. |
Trading Session Timeline
Equity market trading runs from 9:15 AM to 3:15 PM, followed by a Closing Auction Session that determines the official closing price.
Closing price discovery happens through a Closing Auction Session conducted after regular trading closes (typically after 3:15 PM), instead of using the last 30 minutes VWAP window.
Closing price formula
Closing Price = Auction equilibrium price at which the maximum quantity of buy and sell orders are matched during the Closing Auction Session.
How it is calculated?
Step 1: A Closing Auction Session is conducted after regular trading ends
Step 2: Buy and sell orders are collected during the auction window
Step 3: Orders are matched at a single price that gives maximum executable volume
Step 4: This matched auction price becomes the official closing price
Why this method is used?
- Avoids manipulation by last-minute trades.
- Reflects fair market value at session end.
- Ensures consistency for settlement, NAVs, and reporting.
Why is the opening price different from previous day’s closing price?
Exchanges use a Closing Auction mechanism at market close to improve price discovery and reduce the impact of last-minute price distortion. It is discovered through a structured closing auction where orders are matched at a single equilibrium price.
Overnight news, global market trends, or company announcements can shift investor sentiment, causing the stock to open higher or lower than its previous closing price.
Note: The Closing Auction Session is being implemented in phases starting with stocks that have active derivatives contracts. Other stocks may continue with the earlier VWAP-based method until the framework is expanded.
