NSE blames Emkay for triggering circuit breakers on Nifty

Emkay Global apparently placed non-algo market orders for an erroneous quantity and value of Rs650 crore

The National Stock Exchange (NSE) has blamed a brokerage house, Emkay Shares & Stock Brokers, for triggering circuit breakers on the Nifty, which led to closing of the cash market and a huge fall, about 800 points in the index.


"The market circuit filter got triggered due to entry of 59 erroneous orders which resulted in multiple trades for an aggregate value of over Rs650 crore. These orders have been entered by a trading member Emkay Global Financial Services on behalf of an institutional client," NSE said in a release.


"These non-algo market orders have been 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. These orders have been identified to a specific dealer terminal," it added.


The markets opened normally today. However at 9.50am, the Nifty circuit filter got triggered, which immediately closed the cash market. The fall in Nifty was apparently due to abnormal orders resulting in multiple trades at low prices. "While the exchange systems functioned normally without any glitch, the above abnormal trades caused market closure automatically due to the index circuit filter getting triggered. The market was reopened by the exchange with a pre-open phase at 10.00am and trading resumed at 10.05am. The market is functioning normally and the incident is being investigated," NSE said.


Trading on the BSE was normal. In a release, the exchange said, "The market at BSE is working fine and trading members are informed that there are no issues technical or otherwise at BSE."  However, the BSE index Sensex also fell by about 200 points in reaction to the plunge in Nifty, as there are many common stocks on the two indices.


The incident occurred on a day when expectations were high for a sharp upward rally on the bourses following various reform measures approved by the Union Cabinet last evening, including on FDI in insurance and pension sectors.


Earlier in the morning, Nifty had fallen sharply by about 800 points or 16% to a low of 4,997.6.

Officials from Emkay Global were not immediately available for comments.



Parmod Bhalla

4 years ago

It was a clear case of market manipulation by indulging in basket trading. SEBI should investigate this case and come out with guidelines on max size of a single order for each stock. Otherwise small investors will be always losers in this market.

Software stocks expected to show some improvement in Q2

Demand is likely to improve in the IT Services sector in the second quarter. Market trends include cost efficiency drive at clients and slow incremental business with market share shifts, says Nomura Equity Research 

Nomura Equity Research in its Quick Note predicts improvement in growth trajectory over the period second to fourth quarters of FY12-13 in the IT services sector in India. Aggregate revenue growth of 3.7% quarter-on-quarter (q-o-q) for the IT services sector in the second quarter is expected, which is better than the growth of 1.7% q-o-q in first quarter, in line with seasonality. However, some problems like discretionary demand continuing to be soft, and large revenue contributors like BFSI (banking, financial services and insurance sector) and telecom continuing to be sluggish, are likely to remain in the current financial year, according to Nomura.
In Nomura’s view, the following trends are anticipated in the IT services sector:
 Cost efficiency drive at clients leading to improved demand for IT companies.
 Slow incremental business with market share shifts playing a more important role in  
   demand generation.
 Equities likely to benefit would be those which have market share gain-focused
    players with lower margin thresholds and Tier 2 players making a bigger delta on
    their smaller revenue bases. 
 Companies with current business momentum are likely to do well.
 It is too early to play hopes of a revival in turnaround candidates, namely Infosys
    and Wipro. 
 HCL Technologies, followed by Cognizant, remain the top buys in Tier-1 IT, Hexaware
    and iGATE remain the top Buys in the Tier-2 IT in the stock market
 Preference towards TCS (Tata Consultancy Services) over Infosys and Wipro within
   the neutrals in the stock market. 
•  Infosys remains the least preferred stock in Tier-1 IT.
•  Margin pressure from recent rupee appreciation especially for companies which
    haven’t gained materially on margins from rupee depreciation till first quarter of
    the current financial year.
 Sporadic discussion on pricing is continuing in the IT sector. Growth is being driven
    by  lower value-added offerings.
Nomura expects market share-focused players (e.g., HCL Technologies, TCS and Cognizant) to continue to lead US dollar revenue growth (with 4.1%, 4.2% and 4.7% q-o-q growth respectively). Infosys is likely to see a lower growth differential in the second quarter (at 3.2% q-o-q). Wipro is likely to be the worst of the lot (at 1.8% q-o-q). 
On margins, Nomura expects Infosys to fare better (+70 bps q-o-q) against flattish trends at TCS and 80-170 bps declines at Wipro and HCL Technologies. This is likely to be due to wage hike impacts. 
On the bottomline, Infosys could fare better, in Nomura’s view, from hedging gains given substantial reduction in forward premiums on hedges over the last quarter and the company’s accounting policy of marking to market all hedging gains/ losses every quarter and taking it to the profit & loss account.


Government clears tripartite agreement for operationalising Infra Debt Funds

The IDF would be based on a tripartite agreement between developer, lender (bank) and the IDF and loans by the banks would be refinanced by IDF so that the lenders have free funds for more lending

New Delhi: With an aim of infusing greater funds into infrastructure sector, the Indian government has cleared a tripartite agreement for setting up of Infrastructure Debt Fund (IDF) to re-finance bank debt to the sector, reports PTI.
The Cabinet Committee on Infrastructure (CCI) cleared the tripartite agreement for operationalising the IDFs after consultation with the Reserve Bank and other stakeholders, Indian Finance Minister P Chidambaram said.
"There is a felt need for long-term infrastructure funding... One year after commencement date, the IDFs will step in and take over the debts of the banks up to 85%," he said after a meeting of the CCI.
The IDF would be based on a tripartite agreement between developer, lender (bank) and the IDF. The loans by the banks would be refinanced by the IDF so that banks have free funds for more lending.
Infrastructure projects are initially funded by banks or a consortium of banks. Such projects require long-term funding of 20-25 years, while bank funding cannot be of horizon beyond 5-7 years.
"IDFs will provide the long-term funds for the remainder of the life of the project. These frees up bank fund for further lending. This will mean new funds will flow into infrastructure, banks funds will be released one year after commencement of the project.
And, therefore, we hope that more debt funds will be available for infra projects," Chidambaram said.
Rating agency Crisil said the immediate opportunity for IDF-NBFCs to be nearly Rs 20,000 crore.
The IDF, which was proposed in the Union Budget for 2011-12 fiscal, is aimed at accelerating and enhancing flow of long term debt for funding the ambitious programme of infrastructure development in the country. .
An IDF may be set up either as a trust or company... A trust based IDF (Mutual Fund) would be regulated by SEBI, while an IDF set up as a company (NBFC) would be regulated by the RBI.
The fund would try to garner resources from domestic and off-shore institutional investors, especially insurance and pension funds. Banks and financial institutions would be allowed to sponsor IDFs.
An NBFCs with a minimum capital of Rs 150 crore can set up an IDF. Such a fund would be allowed to raise resources through rupee or dollar denominated bonds of minimum five-year maturity. These bonds could be traded among the domestic and foreign investors.
Company based IDFs would be allowed to fund projects in public-private partnership (PPP) which have completed one year of commercial operations.
As regards the trust-based IDFs, the fund could be sponsored by a regulated financial sector domestic entity. It would have to invest 90% of its assets in the debt securities of infrastructure companies or SPVs across all infrastructure sectors.
Minimum investment by trust-based IDF would be Rs1 crore with Rs10 lakh as minimum size of the unit.
The requirement of infrastructure fund in the 12th Plan (2012-17) has been pegged at $1 trillion.


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