RIL session puts Nifty off the track

While the special trading sessions for a single scrip may have been rarest in any world market, the special morning session for Reliance Industries on Wednesday did not seem to serve the purpose.

The 90-point fall in the Nifty in the regular morning session after the market opened created confusion but major losses were averted after the players realised the error, much before the exchange made the correction.

The Nifty futures continued to trade at a significant premium to the spot reflecting the actual position. The confusion in the opening trade was owing to the greater fall in the Nifty, which fell by 91.60 points. The Sensex fell by 90.45. Generally, the change in Sensex is about three times the change in Nifty.

HDFC Securities head-retail research, Deepak Jasani feels that although there was no major adverse impact, the error by the NSE resulting in the 90 point fall, defeated one of the main purposes of the special one-hour trading that was organised to decide the price of Reliance Industries stock, following the demerger of its non-petro businesses.

The special session from 8-9 am on Wednesday was arranged with the intention of smooth transition of Reliance Industries as a constituent of the index, post demerger. The BSE did a good job on the same, analysts felt.

Some brokers say that there was no problem in the trading of Nifty futures as only the spot Nifty was down. Thus, no major losses were incurred by any players there.

But since traders do keep an eye on the spot price, while trading in derivatives, some traders who traded in the index for the first 15-20 minutes under the impression of the wrong spot Nifty may have incurred some losses. Also, those players who had old "long" positions may have got affected to some extent.

Jasani adds that overall, the whole issue dented the market sentiment to some extent, which turned negative for a while.

Market participants add that some of them had started to short sell after seeing the fall in the Nifty. Nevertheless, much before the NSE realised the mistake and corrected it, players became suspicious about the fact that both, the Sensex and the Nifty, had fallen by the same measure, which is unlikely.

Thus, the false impression was corrected much before the exchange reversed the mistake. Those who short sold earlier, started buying again.