MISTAKES by a local brokerage in placing orders worth $US125 million ($A122.60 million) briefly crashed India's National Stock Exchange, leading to a 15.5 per cent fall in the main index and a suspension of trading. The exchange's Nifty index fell 920 points on Friday morning with shares in heavyweight financial stocks such as State Bank of India (SBI) and HDFC particularly hard hit.
"The Nifty fall was on account of abnormal orders resulting in multiple trades at low prices," a statement from the exchange said. "The circuit filter got triggered and the market closed automatically."
After the automatic suspension of 10 minutes, designed to ensure stability on the market and avoid wild fluctuations, trading resumed in line with global trends and India's other market, the Bombay Stock Exchange.
Mumbai's Emkay Global Financial brokerage, which placed the erroneous trades, was later suspended from trading at the exchange and could face a large liability related to the 59 mistaken orders.
NSE senior vice-president Ravi Varanasi said an investigation would be completed soon "into how orders were sent despite controls being in place for trading members.
"But from what I understand, the event stems from a human error," Varanasi told AFP.
He said that the NSE would decide when to lift Emkay's suspension after the investigation was completed.
The trades were not cancelled and have gone through, an NSE spokeswoman told AFP.
Analysts said the brokerage had likely sold shares at prices far lower than market prices. The trades could have been reversed by buying back the shares at higher levels.
The Nifty closed the day down 0.70 per cent at 5,746.95 points, while shares in Emkay sank 9.86 per cent to 31.1 rupees on the Bombay Stock Exchange (BSE), which hosts more companies than the National Stock Exchange (NSE).
Shares in State Bank of India, which fell 14.2 per cent in morning trade, ended down 0.27 per cent at 2,339.45 rupees.
An Emkay spokesman declined to comment to AFP other than saying the company was "investigating the matter".
Friday's incident was at least the third instance since April when trading on the National Stock Exchange has been hit because of incorrect orders, Dow Jones Newswires reported.
This comes at a time when competition is set to intensify among India's stockmarket operators with the entry of the MCX Stock Exchange, which is set to start operations next month.
