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A flash 900 - point crash in the National Stock Exchange’s index Nifty this morning eroded an estimated Rs 10 lakh crore of investor wealth, though for a brief period.
The Nifty showed a sudden fall of nearly 900 points, or over 15 per cent within seconds, triggering the circuit filter (maximum permissible limit of movement in the index), halting the trade at 0950 hrs for 15 minutes.
During the period, the investors’ wealth slumped by nearly Rs 10 lakh crore.
The Nifty finally closed the day at 5,746.95, down 40.65 points or 0.70 per cent, recovering most of the initial losses. On the other hand, the Sensex ended 119.69 points lower at 18,938.46.
Market regulator Sebi has begun initial probe into the flash—crash.
NSE has claimed there were no technical glitches in its system and the crash was due to ‘erroneous’ trade orders worth over Rs 650 crore by Emkay Global, which has been now disabled by the bourse for trading.
The exchange said the abnormal orders were ‘non—algo’ in nature and were entered for an erroneous quantity which resulted in executing trades at multiple price points across the entire order book. The exchange has also identified these orders to a specific dealer terminal.
The incident occurred on a day when expectations were high for a significant upward rally on the bourses, following some major reform measures approved by the government last evening, including on FDI in sectors like insurance and pension.
“A healthy upmove on back of fresh reforms was expected in the markets today. However, the initial euphoria was cut short due to confused sentiments resulting due of erroneous trade on NSE near the start of the day,” Milan Bavishi Head Research Inventure Growth & Securities said.
Trading resumed at NSE at 1005 hrs, NSE said, adding that the market is functioning normally since then and the incident is being investigated.
The Sensex had also fallen about 300 points in the morning, in reaction to the Nifty crash, as many stocks are common to the two indices.
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