Technical view by Nooresh

Nifty Futures 5300 to 5000 – The Algo Trade, Manual Error, Fat Fingers -300 points gone in a Minute.



Nifty Futures dropped 300 points in a minute. I did see it on the screen too. 

From 5300 to a low of 5000 and back to 5240-5250 in a minute and closed around 5300 by end of the day.

Net result was 20 negative but that few minutes were a killer.

Most important thing Nifty Spot did not see a similar correction. This is how it looks like. So the scare that came in futures did lead to a 50-70 point dip but a subsequent recovery.




There have been lot of rumours of an Algo trade by a foreign broking firm which hit 17 lakh Nifty.


Have got many reasons from some big guy selling, GAAR effect or some big shorts had to cover etc etc. Just a brief reasoning after speaking to a couple of dealers and traders.


Ideally this has to be an Algo trade as Nifty has a quantity freeze on single orders so it cannot be a single dealer mistake as there is a limit of maximum quantity per order. Also such a trade may need a broker to have 300-400 crore margin ( very few indian brokers have that open all the time on one terminal ) . Whereas in algorithmic trading one can do order slicing timewise, valuewise, average traded price, market orders and many such parameters. Some big broker did screw up on the parameters or a dealer had a Fat Finger.


Last friday we had seen a possible Nifty basket as there were huge volumes on quite a lot of Nifty scrips which happens many a times but this time around the volumes were specific to Nifty futures only.


FII figures do not show a big trade so who did it ?? NSE has not recognized it to be an error so somebody took the possible 20-30 crore hit.


It clearly shows our stock exchanges do not have enough depth but we are not as connected like US systems :) too. We do have circuit breakers on spot markets. We can just forget the Friday as our Fat Finger Day :)


 Dow Jones had a fat finger day a really FAT one where one trade led to another with dow crashing 998 points. Many stocks traded 90-95% down also and recovered back fully. Nasdaq had to cancel trades in 296 stocks !! . Accenture traded at a 1 cent from 40 $ :) back to 37-39.


Markets do find equilibrium after such crashes in quick time so lets take this NSE fat finger day. Even bse had one some time back on its newly launched Sensex futures.


All in all we should celebrate the fact that NSE also gets into the league of NYSE as we also had a Fat Finger day but luckily we are not as obese as US :) 

Article by Nooresh Merani

Nooresh has written 2531 articles.

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{ 4 comments… add one }
  • prem April 23, 2012, 07:30

    may be some body (sebi, rbi,govt,even u.s financial big wigs) in trial of what would happen if big financial crisis bank’s stress test.

  • Nirav Shah April 23, 2012, 12:26

    nice data collection nooreshbhai

  • vritika April 23, 2012, 20:10

    sir,why is everybody so negative in the market.

    • Nooresh April 23, 2012, 20:17

      Hi vritika,

      Nowadays price movement is affecting the views.

      Few weeks back at 5600 or 5350 we would hear positive views.

      Now at 5200-5100 we will see negatives.

      Overall simply put there are lot of concerns with USD-INR , govt , policy paralysis, GAAR effect and global issues. But there is light at the end of the tunnel. So be focused wait for opportunities be ready to take a 10-15% hit notionally.


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