Mumbai: The rebalancing of MSCI indices on Monday, the first since the introduction of the new Closing Auction System (CAS), was marked by sharp swings in several stocks in the final minutes of trade. As global passive funds bought and sold stocks to align their holdings to the new index composition, various stocks witnessed unexpected spurts and declines, catching traders by surprise.NSE said it recorded a turnover of ₹39,718 crore during CAS on Monday, which accounted for 22% of the day's total cash market turnover on the exchange. The MSCI rebalancing contributed significantly to the CAS volumes.Lenskart Solutions, Adani Energy Solutions, Billionbrains Garage Ventures and Laurus Labs were added to the MSCI India Standard Index, while Astral, Balkrishna Industries and SBI Cards and Payment Services were excluded."During Monday's CAS session, we saw significant moves in several large-cap stocks, including in stocks that had nothing to do with the MSCI rebalance," said Samir Doshi, CEO, Marwadi Shares and Finance. Shares of Adani Enterprises and Adani Ports ended 9.8% and 6.7% lower, respectively, on Monday, while Bharti Airtel and ITC fell nearly 4%.Doshi said that the fall in Bharti Airtel has no "apparent fundamental" trigger. "ITC, HUL and Adani Ports saw similar moves, while Axis Bank and TCS moved in the opposite direction, ending nearly 3% higher, all without any meaningful change in fundamentals in the final 15 minutes of trading," he said.Quarterly rebalancing is usually easy money for arbitrageurs, who position ahead of compulsory index-fund buying and selling.This time, however, the Closed Auction Session disrupted that playbook. With a larger chunk of rebalance flows pushed into the auction window, several stock futures traded at steep discounts to spot, eroding what is typically seen as a near-certain arbitrage opportunity. "While some volatility is normal during rebalancing, heavy pre-positioning by traders, HNIs and FPIs may have triggered stop-losses, pushing some large names down more sharply than expected," said Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research.Read more: Rajesh Exports repays ₹510 crore dues to Canara Bank after DRT orderPagaria said the MSCI rebalancing went about normally with "nearly 90-95% of volumes concentrated in the CAS session, particularly in F&O stocks"Domestic markets were already anticipating heightened volatility.Thst's due to the rebalancing in global index provider MSCI's August rejig. Index revisions typically move stocks because passive global funds align their portfolios with benchmark compositions. Additions prompt index-linked ETFs and passive funds to buy the stock, while deletions force selling.Pagaria said that non-F&O stocks affected by the rebalance did not see any outsized moves."In other non-event stocks that ended lower, the moves largely reflected the usual CAS impact we have observed in recent days. Stocks that fell without any fundamental trigger could see recovery in tomorrow's session," he said.