Religare Says Software Glitch Caused 10% Plunge in Tata Motors

Religare Capital Markets Ltd., a brokerage controlled by India’s billionaire Singh brothers, said a software glitch sent Tata Motors Ltd.’s shares tumbling 10 percent in Mumbai trading yesterday.

Billionaire Kumar Mangalam Birla’s UltraTech Cement Ltd. also fell by the same amount before paring losses. Tata Motors, the owner of Jaguar and Land Rover brands, declined 5.5 percent to 281.65 rupees at close, while UltraTech lost 3.4 percent.

“Due to some technical issue in the software, unintended transactions got executed,” Religare said in a statement today. “The matter is being investigated by the software supplier.”

The error comes four months after trading was halted for 15 minutes on the National Stock Exchange, India’s biggest bourse, as the S&P CNX Nifty Index plunged 16 percent on Oct. 5 due to erroneous orders entered by a dealer at brokerage Emkay Global Financial Services Ltd. Yesterday’s trades weren’t because of a broker error and didn’t cause any loss to clients, Religare said. Faulty software caused a $457.6 million trading error at Knight Capital Group Inc. in the U.S. in August.

Tata Motors dropped from 290 rupees to 270 rupees in one trade four seconds before 3:07 p.m. Within nine seconds it fell further to 269.95 rupees before recovering, according to data compiled by Bloomberg.

“It’s a very unfortunate incident,” Arun Kejriwal, director at Kejriwal Research & Investment Services Pvt. in Mumbai, said in a phone interview today. “The good thing is that now we know what, where and how it happened and it was not a systemic error or something like that.”

Erroneous Orders

Knight bombarded U.S. equity exchanges with erroneous orders on Aug. 1 after improperly installing software that malfunctioned, according to Chief Executive Officer Thomas Joyce. The trading caused volume to surge and prices to swing in dozens of securities listed on the New York Stock Exchange and NYSE Arca.

Religare will “operate as normal” on Feb. 4. The brokerage may have lost 100 million rupees ($1.8 million) to 150 million rupees due to the error, according to calculations by CNI Research Ltd.

“That’s small change for a big broker like Religare,” CNI managing director Kishor Ostwal said by phone today.

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