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Sensex Gains as IT Stocks Rally; SEBI Revises Trading Rules

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Indian equity benchmarks closed higher on Friday, with the Sensex advancing over 400 points and the Nifty gaining nearly 150 points, primarily driven by a strong rally in IT stocks following better-than-expected Q2 earnings. Meanwhile, the Securities and Exchange Board of India (SEBI) announced significant revisions to the Closing Auction Session (CAS) framework and derivatives settlement rules, impacting market mechanics. The Reserve Bank of India's directive for banks to maintain a 99% daily Cash Reserve Ratio (CRR) also came into effect today, influencing banking sector liquidity.

Key highlights

• Nifty 50: Closed up 0.65% at 23,146.15, recouping early losses, led by IT and metal sectors.
• SEBI Regulations: Revised Closing Auction Session (CAS) framework and derivatives settlement rules announced, with some changes effective December 7, 2026.
• RBI CRR: Banks are now required to maintain a minimum of 99% of the Cash Reserve Ratio (CRR) daily, effective October 16, 2026, up from 90%.
• IT Sector: The Nifty IT index was the top sectoral gainer, with Tech Mahindra surging over 7% post-Q2 results, and Infosys and TCS also seeing significant gains.
• Crude Oil: Brent crude remained elevated around $105 per barrel, while the Indian Rupee strengthened to approximately 94.79 against the US Dollar.

SEBI Overhauls Closing Auction Session and Derivatives Settlement Rules

The Securities and Exchange Board of India (SEBI) has introduced a revised framework for the Closing Auction Session (CAS) and modified the settlement methodology for stock and index derivatives contracts. The changes, outlined in a circular, aim to enhance market integrity and efficiency. Under the new rules, the 10-minute closing auction session will now operate from 3:30 PM to 3:40 PM on all trading days.

A significant revision involves the calculation of settlement prices for expiring derivatives contracts. These will now be based on a Volume Weighted Average Price (VWAP) methodology, utilizing trades executed during the last 30 minutes of the continuous trading session. For index derivatives, the settlement price will be derived from the VWAP of constituent securities during this period, while for stock derivatives, it will be based on the stock's VWAP.

Trading timings have also been adjusted. Index and stock derivatives will continue to trade until 3:45 PM, with the exception of expiring index derivatives contracts, which will cease trading at 3:30 PM. The post-close session in the equity cash segment will run from 3:50 PM to 4:00 PM, allowing trades to be executed at the closing price.

The regulator stated that most of these changes will take effect from December 7, 2026. Following the announcement, shares of exchange-related entities like BSE Ltd. and brokerage firms such as Angel One came under pressure in early trade on Friday. BSE shares declined by 3.29%, while Angel One fell 3.16%, reflecting initial market reaction to the revised framework. SEBI Whole-Time Member KVR Murty indicated that the regulator would observe the revised framework for at least a year before considering further changes, emphasizing that future revisions would involve market consultations.

RBI Mandates Higher Daily CRR Maintenance for Banks

The Reserve Bank of India (RBI) has increased the minimum daily maintenance of the Cash Reserve Ratio (CRR) for scheduled commercial banks from 90% to 99%, effective from the fortnight beginning October 16, 2026. This directive means that banks must now maintain at least 99% of their total CRR requirement on a daily basis, a significant increase from the previous 90% threshold.

The move comes as part of the central bank's efforts to manage surplus liquidity within the banking system. The banking system had been experiencing a liquidity surplus, which stood at approximately ₹3.88 lakh crore as of October 8. By raising the daily CRR maintenance, the RBI aims to absorb some of this excess liquidity, thereby tightening monetary conditions.

This adjustment is expected to reduce the flexibility banks have in managing their daily reserve balances. While the overall CRR percentage remains unchanged, the higher daily maintenance requirement implies that banks will need to hold a larger portion of their reserves consistently, potentially impacting their short-term lending and investment decisions. Analysts suggest this could lead to a liquidity drain of ₹40,000-80,000 crore from the system. The RBI had previously indicated that while it preferred other tools to manage liquidity, increasing CRR would be an option if necessary. This measure is likely to be closely watched for its impact on interbank lending rates and overall credit availability in the coming weeks.

More stocks and market news

IT Sector: Strong Q2 Earnings Drive Rally

The Indian IT sector witnessed a significant rally on Friday, extending its positive momentum from earlier in the week, largely fueled by better-than-expected Q2 earnings and positive management commentary. The Nifty IT index emerged as the top sectoral performer. Tech Mahindra led the gains, surging over 7% after reporting a 32.74% jump in consolidated net profit to ₹1,585.6 crore for the September quarter of FY27, driven by strong volume growth and cost savings. Infosys and Tata Consultancy Services (TCS) also contributed to the sector's upswing, with their shares advancing by 4.36% and 3.51% respectively. This sector-wide resurgence added approximately ₹2.6 lakh crore in market value to IT stocks this week, making it the best-performing index.

Government Revises Windfall Tax on Fuel Exports

The Indian government has adjusted the windfall tax on petroleum exports, with new rates effective from October 16, 2026. The export duty on petrol has been increased to ₹2.5 per litre from ₹0.5 per litre. Conversely, the levy on diesel exports has been reduced to ₹8.5 per litre from ₹16 per litre. These fortnightly revisions are part of the government's strategy to align domestic fuel availability and pricing with international crude oil and petroleum product prices, especially amidst ongoing volatility in global energy markets. The contrasting revisions for petrol and diesel exports reflect the government's dynamic approach to managing the energy sector's fiscal landscape.

Crude Oil Remains Elevated, Rupee Strengthens

Global crude oil prices remained elevated on Friday, with Brent crude trading around $105.51 per barrel and US West Texas Intermediate (WTI) crude at approximately $97.43 per barrel, despite marginal dips. Geopolitical tensions in the Middle East continue to support higher prices, posing risks to India's import bill and inflation outlook. Meanwhile, the Indian Rupee showed strength against the US Dollar, appreciating by 20 paise to trade at 94.79 in early trade. This strengthening was attributed to a softening US Dollar and the positive impact of the RBI's structural forex interventions, offering some relief on import costs.

Market context

The Indian equity markets closed on a positive note, with the BSE Sensex gaining 413.66 points (0.56%) to settle at 74,729.27, and the NSE Nifty 50 advancing 148.80 points (0.65%) to close at 23,146.15. The Nifty IT index was the top gainer, while broader markets saw mixed performance with Nifty MidCap and SmallCap indices trading lower earlier in the day. The India VIX, a measure of market volatility, remained stable. In commodities, Brent crude traded above $105 per barrel, while the USD/INR pair was around 94.79, indicating a stronger rupee. Global markets showed mixed cues, with Asian equities generally higher.

Why these stories matter

The SEBI's revised CAS framework and derivatives settlement rules are crucial for market participants as they alter trading mechanics and settlement procedures, potentially influencing liquidity and price discovery in the closing hours. The RBI's increased daily CRR maintenance directly impacts banking sector liquidity and operational flexibility, with implications for short-term interest rates and credit growth. The robust performance of the IT sector, driven by strong Q2 earnings, signals resilience and potential for growth in a key economic segment. The government's adjustments to windfall taxes on fuel exports directly affect oil marketing and refining companies, while elevated crude oil prices and a strengthening rupee continue to be critical macro factors influencing India's economic stability and corporate profitability.

What to watch next

• Upcoming Q2 Earnings: Investors will closely monitor the remaining Q2 FY27 earnings announcements from major companies across various sectors.
• RBI Monetary Policy: The next Monetary Policy Committee (MPC) meeting is scheduled for December 2-4, 2026, where further cues on interest rates and liquidity management will be keenly watched.
• Global Crude Oil Prices: Geopolitical developments and their impact on international crude oil prices will remain a key factor for India's economy.
• FII Flows: Foreign Institutional Investor (FII) activity will continue to influence market sentiment and direction.

Sources

• Economic Times: From worst to best: How IT stocks staged a Rs 2.6 lakh crore revival this week
• NDTV Profit: SEBI To Wait At Least A Year Before Revisiting CAS, Says KVR Murty
• NDTV Profit: RBI Raises Daily CRR Requirement For Banks To 99% From October 16
• Business Standard: Sensex Today | Stock Market LIVE Updates, Friday, Oct 16, 2026
• The Times of India: Stock Market Today Live Updates: Sensex climbs 413.66 points to settle at 74,729; Nifty closes at 23,146

FAQ

1. What are the key changes in SEBI's revised Closing Auction Session (CAS) framework?

SEBI has revised the CAS to run from 3:30 PM to 3:40 PM. Settlement prices for expiring derivatives will now use a Volume Weighted Average Price (VWAP) from the last 30 minutes of continuous trading. Trading for most derivatives will continue until 3:45 PM, with expiring index derivatives closing at 3:30 PM.

2. How does the RBI's increased daily CRR maintenance affect banks?

Effective October 16, 2026, banks must maintain a minimum of 99% of their Cash Reserve Ratio (CRR) daily, up from 90%. This move aims to absorb surplus liquidity from the banking system and reduces banks' flexibility in managing their daily reserves, potentially impacting short-term lending.

3. Why are IT stocks rallying today?

IT stocks are rallying due to better-than-expected Q2 earnings from major players like Tech Mahindra, which reported a significant jump in profit. Positive management commentary and a broader positive sentiment for the sector have also contributed to the gains.

4. What are the new windfall tax rates on fuel exports?

Effective October 16, 2026, the windfall tax on petrol exports has been increased to ₹2.5 per litre from ₹0.5 per litre. Conversely, the duty on diesel exports has been reduced to ₹8.5 per litre from ₹16 per litre.

5. What is the current status of crude oil prices and the Indian Rupee?

Brent crude oil is trading around $105 per barrel, remaining elevated due to geopolitical tensions. The Indian Rupee has strengthened against the US Dollar, trading around 94.79, supported by a softer dollar and RBI interventions.

6. When will SEBI's new CAS rules become effective?

Most of the changes to SEBI's Closing Auction Session (CAS) framework and derivatives settlement rules will take effect from December 7, 2026.

Disclaimer: This article is for educational purposes only. It does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.