Blaze may singe Sensex

Market could be in for a correction after the fire at ONGC's oil platform.

A string of settlements -- of derivatives as well as two cash settlements""tomorrow is expected to put pressure on the finances of the broking community. But there would be no settlement problems leading to failure of brokers in meeting their commitments, leading brokers said.

The broking community felt that the market could be in for a correction after the massive fire at ONGC's offshore Mumbai oil platform. The news of the mishap reached Mumbai after trading hours on Wednesday. ONGC has over 14 per cent weighting in the Sensex.

"Brokers are going to face a lot of trouble. The decision to keep the market open on Wednesday was surprising at a time when many Mumbai'tes were still trying to save their lives. Banks are closed for two days. I am really surprised at clubbing of the settlements," said Pradeep Kumar Gupta of Anand Rathi Securities.

"The problem faced by the brokers is reaching out to their customers across the country. They will have to clear their dues, including that of their clients' outstandings," Gupta added.

"Allowing stock exchanges to function on Wednesday has come as a surprise to many," former BSE President Deena Mehta told Business Standard.

But Motilal Oswal of Motilal Oswal Securities had a different point of view. He was confident that the problem would be over without any major payment hassles. "No big payment problem is foreseen. Functioning of markets on Wednesday helped many to square off positions," he said.

There are about four days of trading transactions that are to be settled. Under T+2 rolling settlement, two days of trade need to be settled on Friday.

Besides, the derivatives transactions for the month of July, which were scheduled for settlement on July 27, has been deferred to July 28. The total net settlement value of trades on the NSE settled on July 25 and 26 were at Rs 400.75 crore (against a total traded value of Rs 1,589.23 crore) and Rs 708.84 crore (Rs 1,813.36 crore). The deliveries of stocks to a number of stocks traded were 26.17 per cent and 29 per cent, respectively.

"The banking network has suffered adversely as basic telephone links have failed. The closure of the markets has given the banking system an opportunity to gear for the combined settlement. It is not easy for banks to arrange huge funds that may be required for the combined settlement," Gupta said.