Friday punch floors Nifty futures

The Freakish Friday syndrome was at work again as an erroneous order sent the April Nifty futures down more than 300 points.

The market saw a sharp fall of over 1.6% in the afternoon session when the April Nifty futures, which were trading at 5315, suddenly dipped to 5000, possibly due to ‘wrong’ data entry at some institutional investor’s desk.

“It seems like there was some kind of punching or typographical error. It could have been due to somebody placing a large sell order at market rate without specifying the limit, which would have led to fall,” said Jitendra Panda, head of sales broking at Future Capital Securities.

As per the Bloomberg chart, around 36,602 contracts were traded at 2.25 pm, most of which were sell orders.

Assuming the entire quantity was sell orders, the trades would amount to Rs970 crore (at Rs5,300 per one Nifty future and 50 futures per contract).

Following these trades, Nifty April futures tanked 6%.

Though the markets recovered to 5265 barely a minute later, the triggering of stop loss in Nifty futures long positions and panic selling by others led to them closing the day down nearly 0.75%. The Sensex closed down 129.87 points at 17373.84, while the Nifty shed 41.55 points to close at 5290.85.

Last Friday (April 13) had seen a similar fall of over 1.5% due to alleged basket selling of Nifty futures by some foreign brokerage.
Such blips could make one believe the markets are shallow.   

But experts say data error outside the bounds of normal trading can only cause markets to go down only momentarily.

The low volume at the time of the order need not be a reflection of the depth of the market, said one expert. “The action could be entirely price-related. If you are bidding at a lower price, you do not need large volumes to bring it down momentarily. There are, however, restrictions on prices as well, which would not allow unreasonable orders to come into the system.”

The day also saw some strange trading in Infosys futures, which fell 19.27% during the day to 1950 before rebounding to end at 2412.95, down only 0.11% over the previous day.

On its part, the National Stock Exchange has clarified that its trading systems worked normally and all the trade executions were within the price limits prescribed by Sebi. NSE further clarified that no trades were cancelled or annulled by the exchange.