Freak trade on NSE spooks investor sentiments

Snapping their five days winning streak, Indian equity indices ended the session in the negative terrain with both the bourses tumbling below their crucial 5,750 (Nifty) and 19000 (Sensex) levels. The gauges, despite a firm start, went into a tizzy on Friday after couple of trading errors on Nifty pressed the panic button momentarily, resulting sharp fluctuations in the key stock indices. The NSE circuit filter got triggered due to entry of 59 erroneous orders which resulted in multiple trades for an aggregate value of over Rs 650 crore. These orders had been entered by a trading member Emkay Global Financial Services on behalf of an institutional client. These non-algo market orders were entered for an erroneous quantity which resulted in executing trades at multiple price points across the entire order book thereby causing the circuit filter to be triggered.

Earlier, the markets opened higher for the sixth consecutive session on Friday following Cabinet’s clearance to FDI in insurance and pension, and encouraging comments by ECB President Mario Draghi yesterday. But, the undertone turned cautious, as the markets seemed to have already reacted to the news of impending Cabinet nod for those reforms. Further, selling in banking stocks too dampened the sentiments as the RBI governor D. Subbarao reiterated that inflation was not at a comfort level and at its forthcoming policy meeting on October 30, 2012, a few more measures are expected to be announced to rein in inflation.

However, positive global cues helped domestic indices to recover losses up to some extent as European counters traded with traction in early deals ahead of the closely watched US nonfarm payrolls report, while the euro remained modestly lower against the dollar, pausing for breath following strong gains in the previous session. Moreover, Asian markets ended higher after European Central Bank chief Mario Draghi reassured over its bond-buying scheme. Draghi said on Thursday that the ECB’s ‘bazooka’ to help under-pressure economies by buying their debt to keep borrowing costs low was primed and ready to be used.

Back home, markets traded in the tight band but, in red till end as software and technology stocks got butchered badly through the session after the rupee rose near its six-month high, after the government took more reform measures to attract foreign investment. Selling in public sector oil marketing companies too dampened the sentiments. Stocks like BPCL, HPCL and IOC all edged lower after US crude oil futures surged 4.1 percent overnight, on concern that tension between Turkey and Syria will disrupt Middle East output. However, the losses remained capped to some extent as Auto, consumer durables and FMCG space edged higher by half a percent. The sentiments also got some support after shares of companies engaged in education sector like Everonn Education and Educomp Solution traded jubilantly on back of heavy volumes. The Cabinet on October 4, 2012 approved the draft of the 12th Five-Year Plan, which seeks to increase funding for social sectors such as health and education besides boosting economic growth.

The NSE’s 50-share broadly followed index Nifty, fell by over forty points to end below the psychological 5,750 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex tumbled by about one hundred and twenty points to finish below the psychological 19,000 mark. The broader markets too felt the selling pressure throughout the session and ended the trade with a cut of about a percent. 

The overall volumes stood at over Rs 1.89 lakh crore, which remained on the higher side as compared to that on Thursday. The market breadth remained in favor of declines as there were 1,089 shares on the gaining side against 1,777 shares on the losing side while 130 shares remain unchanged.

The BSE Sensex lost 119.69 points or 0.63% to settle at 18938.46, while the S&P CNX Nifty declined by 40.65 points or 0.70% to close at 5,746.95. The BSE Sensex touched a high and a low of 19137.29 and 18757.34 respectively. The BSE Mid cap index was down by 0.79% and Small cap index down by 0.90%. 

Tata Motors up by 2.24%, Hindustan Unilever up by 1.60%, Mahindra & Mahindra up by 1.16%, ONGC up by 1.09% and Hindalco up by 0.89% were top gainers on the Sensex, while HDFC down 4.89%, Sun Pharma down 2.48%, Wipro down 2.41%, Infosys down 1.84% and ICICI Bank down 1.57% were top losers on the index.

The major gainers on the BSE sectoral space were, Consumer Durables (CD) up 0.66%, FMCG up 0.61%, Auto up 0.55%, Capital Goods (CG) up 0.43% and Oil & Gas up 0.41%, while TECk down 1.65%, IT down 1.62%, Health Care (HC) down 1.40, Bankex down 1.09% and PSU down 0.32% were top losers on the BSE sectoral space.  

Meanwhile, the Cabinet committee on economic affairs on Thursday has approved an outlay of Rs 884.07 crore for the first phase of the end-to-end computerization of Targeted Public Distribution System (TPDS) on a cost-sharing basis with states, to detect and cancel bogus ration cards and better targeting of subsidies. Digitization of beneficiary database and computerization of supply-chain are expected to be implemented by March 2013 and October 2013, respectively. Around 18 crore households, including above poverty line and below poverty line, will get subsidized ration under the TPDS. The cost would be equally shared by both the Centre and state governments for the end-to-end computerization of TPDS.

For the northern states, the Centre will give 90 per cent and the states will bear only 10 per cent. Finance Minister P Chidambaram has opined that the computerization of supply-chain will enable  tracking of the movement of food grains up to fair price sop (FPS) level and through this it can address the problem of leakage and diversion. Moreover, CCEA also gave its approval to new variant of the scheme for supply of imported pulses at subsidized rates to BPL households and also extended the scheme for distribution of subsidized imported edible oils through state governments and Union territories till September 30, 2013. According to the plan, SMSs, e-mails, toll-free numbers will be used to inform the beneficiaries about the availability of TPDS supplies in the ration shops, which will ensure timely and transparent distribution of food grain.

The S&P CNX Nifty touched a high and low of 5,815.35 and 4,888.20 respectively.

The top gainers on the Nifty were Tata Motors up by 2.62%, HUL up by 1.63%, M&M up by 1.23%, Hindalco up by 0.93% and ONGC up by 0.88%. On the flip side, HDFC down by 5.08%, Reliance Infra down 2.76%, JP Associates down 2.64%, Wipro down 2.59% and Sun Pharma down 2.55% were top losers.

The European markets were trading in green, France's CAC 40 up by 1.08%, Germany's DAX up by 0.73% and United Kingdom’s FTSE 100 up by 0.47%.

Asian markets went home mostly higher on Friday as investors were geared up to take risk after a report showed the number of Americans filing new claims for unemployment benefits rose less than expected last week and the European Central Bank said it was ready to buy bonds of troubled euro zone countries. Japan’s Nikkei posted modest gains and ended higher as Bank of Japan kept monetary policy unchanged, but cut its assessment of the economy, citing weakening exports and production. Meanwhile, Hang Seng market garnered half a percent gains with mainland automakers leading the gainers; Malaysia's KLSE Composite ended marginally down.

Financial markets in China remained closed.