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First the itch, then the glitch

Mumbai, July 3: The Sensex today missed the 26K-mark by a whisker before a technical snag and then profit-booking spoiled the show at the country’s oldest stock exchange, which saw trading stop for more than three hours.

The benchmark index seemed to be on course to hit 26000 today when it opened higher at 25875.75 and then rose to 25999.08 in early morning trade.

Around 9.40am, when the index was hovering around 25928, trouble started and the Bombay Stock Exchange (BSE) was forced to shut down all its platforms, including shares, derivatives and currencies.

Market sources said some users could not access the network, even as share prices were not updated.

The exchange said in a statement that several users were logged out abruptly. On a regular day, more than 8,000 connections remain active. Each primary connection can have several users.

“At 9.42am, the number of primary connections had come down to less than 2000 and hence the market had to be closed under current regulations applicable to closure of markets,’’ a statement from the exchange said.

The exchange, along with its network technology (equipment and service) providers, worked to identify and resolve the problem.

The problem was resolved by 12.15pm before trading could resume from the disaster recovery site located in the city.

After initial testing, the currency market started trading at 12.34pm, equity derivatives at 12.36pm and the equity market started at 12.45pm.

The equity market had a pre-open period from 12.37pm to 12.45pm. The markets were, therefore, shut for 3 hours and 3 minutes.

A BSE spokesperson said according to a pre-defined process, the exchange, along with its technology partners HCL Comnet and Cisco, will prepare a root cause analysis and present it to BSE’s Technology Advisory Committee, which consists of information technology heads of various companies, market experts and academics.

This will be later presented to the BSE’s board of directors and the Securities and Exchange Board of India.

“The root cause analysis report will contain the details of the incident, the reasons behind it, how it was repaired, steps suggested and being undertaken with timelines to eliminate the recurrence of such a specific event or similar events,’’ the exchange added.

Turnover at the BSE more than halved today because of the three-hour halt in trade.

The derivative segment’s total turnover tumbled 74 per cent to Rs 13,394.80 crore, while the equity segment’s turnover tanked 67 per cent to Rs 1,429.99 crore compared with yesterday.

Equity volume today stood at 16.32 crore, a drop over 50 per cent from 35.24 crore witnessed yesterday. Stock derivatives took a greater knock as volume (share/contracts) slipped 74 per cent to 3.50 lakh from 13.61 lakh.

Reactions from investors were mixed — some were disappointed as this was the second time in two months that the exchange had seen a glitch; other experts pointed out that it should not be a cause for alarm.

“There have been technical glitches at the NSE in the past as well. This should be taken as a one-off incident and the exchange must have a Plan B that must be quickly operational during such incidents,’’ Arun Kejriwal, director of KRIS, said.

The glitch comes at a time benchmark indices have touched record peaks on positive expectations from the Union budget. Brokers said while the indices looked set to create another record today, profit booking saw them ending in the red.

However, foreign institutional investors (FIIs) continued to pour money into domestic stocks.

Provisional data here showed that these investors made net purchases to the extent of Rs 951 crore.

The Sensex finally closed at 25823.75, down 17.46 points from yesterday’s close.

The 50-share Nifty of the NSE today ended lower 10.35 points, or 0.13 per cent, to finish at 7714.80 after hitting an all-time high of 7754.65 in early trade.

 
 
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