On Friday afternoon, NSE's Nifty futures contract for April saw a freak trade which valued the futures contract at 5,000.

Earlier in the day, Infosys stock futures which was trading around Rs 2,400 levels suddenly lost Rs 450 and touched the day's low of Rs. 1,950.

“One hears of a freak trade happening once in a decade, said Mr Arun Kejriwal, Founder KRIS Research.

“Twice in a day is certainly not acceptable and clearly shows something is wrong with the system.

“If a freak trade can cause so much damage, what would have happened had it been intentional. One hopes that the regulator looks into this issue seriously and does not allow it to be dismissed as a mere error,” he added.

Clarification & probe

The NSE clarified that its trading systems worked normally and all the trade executions were within the price limits prescribed by SEBI.

The exchange is examining the causes for the sudden fall in the Nifty, as part of normal investigation procedure.

It further clarified that no trades were cancelled or annulled. Marketmen said that this incident makes a strong case for strengthening surveillance systems.

Dealing error

“The broker who routed these trade would have lost Rs 7-8 crore on the Nifty, and Rs 1-2 crore on Infosys,” said a derivatives expert.

There were some who felt that this was a ‘pure dealing error'.

“These two contracts are very liquid, so why would one try to impact the cost by such a huge margin when both could have been sold at a lower impact cost or higher price,” said Mr Siddarth Bhamre, Head-Derivatives Angel Broking.

Impact cost is a measure of liquidity. It is the price by which scrips move when large buy or sell orders are placed. Higher the impact cost, more illiquid is the scrip.

raghavendrarao.k@thehindu.co.in

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