The Indian stock market erased all gains to close in the red, with Sensex seeing a sharp downturn at the fag end of the session on its first monthly expiry following the introduction of the closing auction session (CAS).Sensex dropped 539 points or 0.7% to close at 76,934, while Nifty lost 117 points or 0.48% to end below 24,091 on Thursday.This comes after Nifty had ended in the green on Tuesday on its first expiry day since the launch of CAS, introduced by earlier this month, changing the way closing prices are calculated for stocks included in the futures and options (F&O) segment.HDFC Bank and NTPC shares dropped more than 2% each to lead losses on Sensex, while M&M, Bharti Airtel, HCL Tech, ITC, Infosys, IndiGo, Trent, Hindustan Unilever, Tata Steel and Reliance Industries (RIL) shares fell 1-2% to follow. Bucking the trend, Kotak Mahindra Bank shares gained 2%, while ICICI Bank and Tech Mahindra shares rose around 1% each.Expiry-led volatility and the lack of a diplomatic breakthrough in the Middle East continue to keep markets range-bound in the near term, said Vinod Nair, Head of Research at Geojit Investments. While a degree of higher energy prices is largely factored into earnings expectations, the recent moderation in crude oil prices and long-term bond yields is supporting the inflation outlook, the analyst said.Meanwhile, FII inflows and resilient earnings momentum remain supportive for Indian equities, particularly mid-caps, where several segments are relatively insulated from global uncertainties and continue to benefit from strong domestic demand trends, Nair added.What lies ahead for Dalal Street?Investors now will also closely watch the US Fed chair Kevin Warsh’s upcoming Jackson Hole address for signals on inflation, interest rates, and the policy outlook, which could influence global risk sentiment and capital flows into emerging markets, the analyst explained.