NSE rules out 'fat finger trade' as stock markets crash

As stock markets crashed sharply on Tuesday, the marketplace was rife with speculation about a 'fat finger trade' in a future contract of the National Stock Exchange (NSE) index Nifty even as the bourse's officials maintained that trading was normal.

The trade was within the price range and we have not received any complaint about it being an erroneous trade. Trading has been happening normally, an NSE official said.

However, there was widespread speculation in the stock market that a huge 'fat finger error' took place in Nifty futures contract for January, which swung wildly and fell by 5 per cent from a high of 8,422 (also opening level) to an intra-day low of 8,000 before recovering some lost ground.

NSE officials, however, maintained that there was no freak trade.

In market parlance, freak trades have often been referred to as 'fat-finger trades' and punching errors, as they are often claimed to have been executed erroneously due to entry of wrong parameters or pressing of wrong keys on trading terminals.

However, there have been fears that some manipulators might be at work in the name of erroneously entered trade orders. There have not been many such cases in the domestic equity market.

After a long-drawn upward trend, markets crashed on Tuesday with benchmark Bombay Stock Exchange (BSE) index Sensex plunging by 855 points and the broader NSE Nifty tumbling by over 251 points.