New Delhi, Aug. 5 -- As BSE and NSE introduced the Closing Auction Session (CAS) on Monday, Nithin Kamath, CEO and Founder of Zerodha, said, 'it's not a bad idea' but argued that the sharp closing price swings seen since its launch expose deeper structural weaknesses in India's markets rather than flaws in the auction mechanism itself

In a social media post on Wednesday, Kamath points out, "Most large global markets have some form of closing auction. A large amount of institutional activity, especially from passive funds and other benchmark-tracking investors, happens near the close."

The aim is to enable better price discovery and to make it easier to execute large orders without abruptly moving prices. "But the price dislocations we h...