The trades, which happened in the last 30 minutes of Friday’s trading on both exchanges, were put through at prices below the market rates, resulting in both stocks tumbling as much as 10 per cent before trimming losses.
A National Stock Exchange official said the orders were within the exchange’s limits and came from a single broker. The official said these weren’t freak trades but the exchange would look into the matter. An email query to the Bombay Stock Exchange (BSE) did not elicit a response till the time of going to print. The market was abuzz with speculation that the trades were done through a Delhi-based broking agency.
Tata Motors fell as low as Rs 270.15 on the BSE, after six separate block deals comprising two million shares were put through at 3:06 pm. The stock recovered before closing at Rs 285, down 4.4 per cent on the BSE. UltraTech shares fell to a low of Rs 1,823.70 after one block deal of almost 42,000 shares. The deal occurred around the same time as that of Tata Motors. The stock ended at Rs 1,860.85, down 2.2 per cent on the BSE. The orders at lower prices in both stocks triggered stop-losses, accentuating the slide.
The steep declines reminded traders of the series of freak trades last year which had sent the benchmark indices tumbling. In early October, an erroneous trade punched by a dealer in Mumbai-based broking firm Emkay Global led to the Nifty diving 900 points or more than 15 per cent in a couple of minutes, forcing it to shut down trading for 15 minutes.
In December, the Securities and Exchange Board of India issued a set of risk controls to avoid such flash crashes. Exchanges were, among other things, told not to put through a single order in excess of Rs 10 crore.