Nifty Inches Up 2% In A Session Marred By Technical Snag

The trading at the National Stock Exchange (NSE), was marred by a technical glitch for more than four hours, forcing the exchange to extend the trading hours till late evening. At close, the NSE Nifty 50 index gained 274 points (1.9 per cent) to end near the mark of 15,000 at 14,982, while the Sensex of the BSE was up 1,030 points (2.1 per cent) and ended at 50,782.

The capital market regulator Securities and Exchange Board of India (Sebi) has asked the NSE to carry out a detailed investigation of the technical snag that occurred at the exchange. Sebi has asked the exchange to explain the reasons for trading not migrating to the disaster recovery site and submit the details of the investigation at the earliest. 

Market experts termed the technical halt at trading as an unfortunate event. They said NSE by all means is a signature bourse of India. Such events may create an adverse image in the minds of domestic and international investors.

This also means that we need to develop and strengthen existing smaller exchanges to reduce the concentration and contagion risks. The idea floated by the Sebi recently to allow any individual/institution, fitting with the requisite criteria to set up Market Infrastructure Institutions (MIIs) including the stock exchange, is a welcome move in the current backdrop of a technical snag. “The regulator should look at the issue that there is no monopolistic institution evolving that can jeopardise investors’ interest”, they added.

This is what exactly happened at the NSE, as it was marred by the technical snag. The trading turnover at the cash segment was impacted due to the snag. Against Tuesday’s turnover of Rs 76,000 crore the exchange recorded a turnover of Rs 45,837 crore in the cash segment. The direct beneficiary of the NSE’s technical fault was its rival BSE, which clocked the turnover of Rs 40,700 crore against the daily average turnover of sub Rs 10,000 crore. The turnover at BSE was at its highest since March 2017, due to the diversion of trades to that exchange. 

The Nifty opened flat and rose in early trade. The NSE shut trading in its cash and derivative segments at 11:40 am, citing “issues” with telecom links of its two service providers, which it said impacted the system and stopped prices from updating. Trading resumed on the NSE at 3:45 pm  and indices rose sharply post the second opening due to square off/shifting activities across exchanges. 

Hemang Jani, Head of Equity Strategy, Motilal Oswal Financial Services said, “After NSE resumed trading the market reacted to the cabinet decision to lift the embargo on the grant of Government business to private banks led to an interest in banks across the spectrum. Nifty Bank has rallied 3.6 per cent with Private sector Banks like HDFC Bank, ICICI Bank, Axis Bank gaining the most. This helped the market to post decent gains."

Among the sectors, banks, media, metals, and realty gained the most. Broader markets also ended with gains but underperformed the benchmark indices.

Among the Asian markets, shares fell on Wednesday as investors weighed the possibility that inflation might prompt central banks to adjust their ultra-low interest rate policies. 

Deepak Jasani, Head, Retail Research at HDFC Securities is of the view that the recent climb in US bond yields has also put the high valuations of growth stocks under pressure. The worst hit was the Hong Kong Hang Seng, registering a fall of 3 per cent. Investors hit the sell button after the city said it would raise stamp duty tax on share transactions from 0.1 per cent to 0.13 per cent. 

European shares opened generally flat to higher on Wednesday after Fed Chair Jerome Powell pushed back against inflation fears. Revised data showed German gross domestic product for the fourth quarter rose an adjusted 0.3 per cent from the prior quarter, which was above a preliminary estimate of 0.1 per cent and above expectations for 0.1 per cent

Nifty has bounced up well after the 5-day fall seen recently. Although this rise is to be seen in the backdrop of the widespread weakness across Asia, the momentum in the indices could take the Nifty up to 15,039-15,132 band in the near term. “However, for the time being, it seems like a correction of the recent fall and not a new uptrend,” Jasani said.