It is rare for indices on the stock markets to log two straight days of big gains. With Nifty 50 of the National Stock Exchange (NSE) gaining 329.20 points or 2.92 per cent on Monday to end the trade at 11,603.40 mark and Bombay Stock Exchange’s Sensex 30 adding 1075.41 points or 2.83 per cent to wind up at 39090.03 it was the second day of sharp rises after the fireworks on Friday which came in the wake of government announcement on reduction in corporate taxes.
But the gains on Nifty seem to have taken their toll on the NSE servers, with a major glitch hitting the exchange on Monday. Updating of individual stock prices at dealer terminals become a major issue towards the middle of the trading session. Stock prices were not getting updated and trader were unable to put the trades of their choice through.
The only option left for dealers was to sell or buy stock at market rate, which essentially meant that they had no idea at what price they were selling or buying till the message of execution was received at their terminal. It is not the first this has happened. Just a few weeks ago, NSE dealers had faced similar situation in the early part of the trading session, but that last only for a short span. On Monday, problem persisted for much longer and had not been sorted out till closing time at 3.30 pm.
The Bulls, who had taken back control of the market on Friday, continued to push the stocks higher, with market breadth remaining positive – most of the shares showed green. The only exceptions were some IT stocks which witnessed a correction -- Infosys fell 5 per cent. Had it not been for a decline in this heavy weight on the index, Nifty and Sensex would have gone up even higher.
The bullish undercurrent in market was strengthen by the fact that most of the companies which came out with their assessment of their bottom line, after the change in the taxation policy, indicated that their tax savings would go towards further expansions. Several of the white goods and auto companies indicated that they might go for a short-term push to their sales in the festive season.
While a large number of short positions (those who had bought expecting a fall in the stocks) have been wiped out in the last two trading sessions, traders may need to keep a watch on movements over the next few sessions as the expiry of the monthly series of derivative contracts on September 26 will bring some amount of volatility back to Dalal Street.
Investor should be cautious and not jump into poor quality stocks just to get over the feeling that they are being left out in this phase of the rally. There will be other such rallies.
