Equilibrium price

Most of the trading day works on continuous matching: an order arrives, and if a matching counter order already sits in the book, a trade happens immediately at that price.

A call auction works differently. Orders pile up for a few minutes without any trades happening. Then, all at once, the exchange looks at the whole pile and picks one single price at which the largest possible quantity of shares can change hands. That price is the equilibrium price.

Every matched buyer and every matched seller gets that same price, whatever price they originally quoted — as long as their order was good enough to be included.

The workbook (Chapter 3, section 3.2.2.3) describes the call auction's core principle as aggregating all buy and sell orders at a specific time to determine an equilibrium price that maximises the number of trades in terms of quantity.

The rules for picking the price, in order:

1. Pick the price with the maximum tradable quantity (the lower of cumulative demand and cumulative supply at that price).
2. If more than one price ties on that maximum, pick the one with the minimum unmatched order quantity.
3. If still tied, pick the price closest to the reference price (for example, the previous day's close).
4. If the reference price sits exactly midway between two tied prices, the reference price itself becomes the equilibrium price.

This mechanism underlies India's pre-open session and, from 2026, the Closing Auction Session (CAS) being phased in for stocks with derivative contracts.

The exchange runs a call auction with this order book:

The maximum tradable quantity is 27,500 shares, at Rs 105. So the equilibrium price is Rs 105.

Every buyer who bid Rs 105 or more gets their shares at Rs 105 — even one who was willing to pay Rs 108. Every seller who offered Rs 105 or less delivers at Rs 105 — even one who was willing to accept Rs 103. Nobody pays or receives their own quoted price; everyone settles at the single clearing price.

Chapter 3 (Introduction to Securities Broking Operations, section 3.2.2.3) explains call auction matching immediately after continuous order matching, with a worked table exactly like the one above. Chapter 6 revisits the mechanism as the basis for the Closing Auction Session. Expect a numeric question: given a demand-supply table, identify the equilibrium price and the tradable quantity.

• Equilibrium price is not the highest buy price or the lowest sell price — it is the price that matches the most shares.
• All matched trades happen at one uniform price, unlike continuous trading, where every trade can happen at a different price against the passive order.
• Ties are broken by unmatched quantity first, then by closeness to the reference price — in that order, not the reverse.
• Do not confuse the call auction's equilibrium price with the day's VWAP-based closing price used outside the Closing Auction Session framework; they are two different closing-price mechanisms serving different purposes.