Nifty 'flash crash', reform worries pull down Sensex below 19K

After gaining around 480 points in past four sessions, the BSE benchmark index opened higher at 19,115.89 after the government yesterday unleashed another round of reforms.

Updated: Oct 05, 2012, 18:09 PM IST

Mumbai: A flash 900-point crash in NSE Nifty index for a brief period this morning and concerns over the fate of big-ticket reforms like raising the FDI cap in insurance, cut short a four-day rally in stock markets with BSE Sensex falling 120 points to end below 19,000 level Friday.

After gaining around 480 points in past four sessions, the BSE benchmark index opened higher at 19,115.89 after the government yesterday unleashed another round of reforms.

However, the Sensex soon dropped over 200 points mirroring a 900-point fall in NSE Nifty due to 'flash crash' in Nifty by erroneous orders worth Rs 650 crore executed by broker Emkay Global Financial Services. This halted trade in cash market for 15 minutes, although NSE said its system worked fine without any technical glitch.

Besides, market participants weighed up the fate of the big-ticket economic reforms announced yesterday as some legislations are likely to face stiff opposition in Parliament when they come up for passage, brokers said.

The Sensex closed 119.69 points down, or 0.63 percent, at 18,938.46. The Nifty closed at 5,746.95, down 40.65 points, or 0.70 percent.

"A healthy up move, on back of fresh reforms, was expected Friday. However, the initial euphoria evaporated due to confusion from erroneous trades on NSE in morning," said Milan Bavishi, Head Research, Inventure Growth & Securities.

Importantly, some bills need to be approved by Parliament before becoming a reality and notably, the main opposition party, BJP, seems opposed to raising the FDI limits, said brokerage Edelweiss in a report.

HDFC, which lost 4.55 percent, was the worst hit among 30 Sensex stocks amid reports that global fund house Carlyle has sold a big chunk of its 3.7 percent stake Friday.

Infosys, ICICI Bank, HDFC Bank, TCS, Sun Pharma and Bharti Airtel also suffered losses while Tata Motors, HUL, RIL, L&T and ONGC rose, cushioning the fall to some extent.

Meanwhile, the rupee traded weaker at 51.81 to the dollar, from its last close of 51.74.
Barring China market which was closed Friday, other Asian stocks ended firm Friday between 0.11-0.69 percent ahead of jobs data in the US later in the day.

"The monthly jobs data for September is expected Friday in the US, which will be closely watched," said Sanjeev Zarbade, Vice President (PCG), Kotak Securities.

European markets were also quoting higher in the afternoon deals after better-than-expected US economic data released yesterday.

The CAC (France) was up by 0.82 percent, the DAX (Germany) by 0.56 percent and the FTSE (UK) by 0.39 percent.

Back home, among the Sensex pack 17 stocks finished with losses while 13 stocks ended with gains.

Besides HDFC, major losers from the index were Sun Pharma (2.48 pc), Wipro (2.41 pc), Infosys (1.84 pc), ICICI Bank 1.57 pc), Dr Reddy's Lab (1.44 pc), HDFC Bank (1.43 pc), Bharti Airtel (1.37 pc), Hero Motocorp (1.11 pc) and BHEL (1.09 pc).

However, Tata Motors gained rpt gained 2.24 percent, followed by HUL (1.60 pc), M&M (1.16 pc), ONGC (1.09 pc) and Hindalco (0.89 pc).

"The undertone was cautious Friday, as markets had already reacted to the news of impending Cabinet nod for FDI in pension sector and increase in FDI limit in insurance.

"However, the undercurrent for the Indian equity remains positive in the wake of the Government's new-found zeal to introduce long-pending economic reforms," said Amar Ambani, Head of Research, IIFL.

Among indices, the BSE-Teck fell by 1.65 percent, followed by the BSE-IT (1.62 pc), the BSE-HC (1.40 pc) and the Bankex (1.09 pc).

The market breadth turned negative as 1,786 counters ended with losses while 1,076 finished with gains. Total turnover rose to Rs 5,444.39 crore from Rs 2,958.36 crore yesterday.

Meanwhile, FIIs pumped in Rs 944.43 crore yesterday as per provisional data with stock exchanges.