The flash crash on the National Stock Exchange on Friday, which led the bellwether Nifty to slump by 900 points (more than 15%) leading the market to shut down for 15 minutes, has now become a political issue. The ruling Nationalist Congress Party (NCP) and opposition Bharatiya Janata Party in Maharshtra have demanded a CBI inquiry into the incident, which was caused by an erroneous trading order punched by a broker at Emkay Global.
NCP spokesman Nawab Malik said the CBI probe was essential to find out whether there was a "conspiracy to destabilise the economy which was looking good after the recent reforms measures announced by the UPA II". The crash which halted trade on the NSE may have impacted small investors adversely, he said.
The BJP, which usually disagrees with everything the NCP does or says, was quick to agree with the view. Vinod Tawade, BJP’s leader of opposition in the Maharashtra Legislative Council, also made a pitch for CBI probe. He also dared anti corruption crusader Anjali Damania, who exposed the multi-crore irrigation scam in Maharashtra, to support the CBI inquiry into Friday’s crash. Tawade’s demand is crucial as Anjali Damania’s husband, Anish Damania, is head (institutional equity) at Emkay Global.
Damania had shot into the limelight after she declared her move to reveal proofs about business partnership between Union agriculture minister Sharad Pawar and BJP President Nitin Gadkari.
Tawade opined that Damania should now extend her support for a CBI inquiry into Friday’s crash of the Nifty.
Observers said BJP’s reaction was predictable as the party was finding it difficult to defend Gadkari for his alleged proximity with irrigation contractors in Maharashtra and also for his recent letter addressed to Union Water Resources Minister Pawan Kumar Bansal requesting an early release of funds for the long-pending Gosikhurd irrigation project in the Vidarbha region of Maharashtra.
When contacted, Anjali Damania said “Please do not mix up the two issues. My fight against the irrigation scam and the Friday’s crash are separte issues. It was a freak trade and the market regulator SEBI is inquiring into the crash.”
Prakash Kacholia, promoter of Emkay did not comment, saying he was busy in meetings.
However, NSE said,” The market 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. While the exchange systems functioned normally without any glitch, the abnormal trades caused market closure automatically due to the index circuit filter getting triggered."