Sensex kisses 14K mark, slips back
Sensex surges past 14,000-point mark, but the spike lasts for only a minute, reports BS Srinivasalu Reddy.india Updated: Dec 06, 2006 13:44 IST
'The fastest finger first’ is no longer confined to Kaun Banega Crorepati. It entered the capital market on Tuesday when a freak deal sent the bellwether BSE Sensex surging past the psychological 14,000-point mark. But the spike lasted for only a minute.
At exactly 9.55.12 am, an as-yet unidentified dealer punched in his first trade. He bought Sensex heavyweight Reliance Industries Limited (RIL) stock at an ‘abnormally’ high price of Rs 1,350 per share. Abnormal, since the scrip closed at Rs 1,260 the previous day, and never managed to reach anywhere close to that price during the rest of the day’s trading.
RIL’s opening (and the day’s high) price was Rs 1,350. Apart from the start of trade jump, RIL moved within a narrow band. The intra-day low was Rs 1,265.50 and the share closed at Rs 1,280, up Rs 14.50 from the previous day’s close. When contacted, an RIL spokesperson declined comment.But the first-minute jump made the BSE Sensex vault to 14,028.47 points—since the trade was struck just 0.12 seconds after BSE’s trading terminals went ‘live’, and the Sensex is calculated live, with every trade moving it up or down.
Clearly, the error was spotted quickly, since the Sensex immediately fell about 60 points to 13,968 points, before starting its by now normal upward journey for the day, before closing with a gain of 63.32 points at 13,937.65.
“There was a punching error in the ‘quote’ column of a buy order by about Rs 100, according to what we have learnt from the market,” Bharat Patel, chief dealer of Asit C Mehta Investment Intermediates told the Hindustan Times.
He added, "The price of RIL in the initial trades took the Sensex to its lifetime peak. As the anomaly was corrected, it fell by about 60 points within a minute."
A similar pattern was seen on the National Stock Exchange as well, where the 50-share Nifty, which includes RIL, also jumped 32 points within a minute, before quickly losing ground. Brokers said that since most traders watch both exchanges, there might have been some reaction to the first trade on the BSE, before the correction was spotted. The Nifty closed the day with a 14.75-point gain at 4015.75.
But was Tuesday's overall rise an aberration? "The fundamentals cannot be expected to change between 13,900 and 14,000 points," said Dinesh Thakkar, managing director of Angel Broking. "These are only psychological barriers and crossing them and falling below them by a small fraction of a percentage would not make much of a difference for the fundamentals of the stock," Thakkar added.
Thakkar cited several positives in the present scenario like lower crude prices, lower interest rate scenario globally and robust domestic corporate results, as reasons for his optimism.