10/05/2012 01:09 EDT | Updated 10/05/2012 01:18 EDT

India Trading Crash Briefly Erases $58 Billion

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Indian men watch a large television screen, showing Indian Finance Minister Pranab Mukherjee presenting the federal budget to parliament, displayed on the facade of the Bombay Stock Exchange (BSE) building in Mumbai on March 16, 2012. Finance Minister Pranab Mukherjee said he would target a fiscal deficit in 2012/13 of 5.1 percent of gross domestic product (GDP), higher than expected but less that the projected 5.9 percent in the current year. AFP PHOTO/Punit PARANJPE (Photo credit should read PUNIT PARANJPE/AFP/Getty Images)

India’s stock market regulator launched an investigation Friday into a sudden plunge in shares that briefly erased $58 billion US in value on the S&P CNX Nifty Index.

The index of 50 stocks fell by almost 900 points, or 16 per cent, during the morning session, halting trading on the National Stock Exchange of India for about 15 minutes.

The Mumbai-based exchange blamed what it said were 59 erroneous orders placed by stock broker Emkay Global.

After the orders were cancelled, trading resumed and the index ended the session down 0.84 per cent at 5,738.70.

The NSE, Asia’s fourth largest market and India’s largest, handles three quarters of stock trades in the country.

Drop follows 'flash crash' episodes

The incident renewed concerns about the effects of electronic trading on the functioning of financial markets.

It happened two days after Nasdaq and other exchanges cancelled some trades of Kraft Foods Group Inc. following an unusual spike after the market opened.

Kraft's shares opened at $45.55 before surging to $58.54 in the first minute of trading. Nasdaq attributed the glitch to a broker error, although it did not name the broker involved.

High frequency trading was also blamed for deepening a so-called “flash crash” in May 2010 which briefly erased $862 billion in market value in U.S. stocks.

And in May of this year, the Nasdaq was so swamped by orders it delayed the first day of trading after Facebook’s initial public offering.

-- With files from The Associated Press

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