Technical glitch on election verdict day leaves investors unable to buy the dip

On June 4, a major glitch impacted the mutual fund investments of many investors using online platforms like Zerodha and Groww. Although these investors bought their mutual funds before the cut-off time, they were assigned the Net Asset Value (NAV) for June 5 rather than June 4, resulting in considerable financial losses.

Broking platforms such as Groww attributed a glitch in the mutual fund system to the BSE, which caused orders to be processed the following day, after the markets had partially recovered. However, the BSE denied any responsibility for the issue.

A user posted on X, formerly known as Twitter, that he bought a midcap mutual fund through the Groww application on June 4 at 12:17 pm, but the NAV was dated June 5. Similarly, another user mentioned purchasing mutual fund units on June 4, with the order confirmed by 2 pm. "However, the units were allocated to me with the NAV of June 5. Why the discrepancy?" the user wrote in their 'X' post. Typically, if an investor invests by 2 pm, they should receive the NAV for that day.

Several investors of Zerodha, Groww, Upstox, and Angel One also vented their anger on social media platforms about their inability square off their positions in equities or F&O.

"Groww has crashed and because of this glitch, I was not able to add any funds and positions got squared off into losses. Users and retail investors are losing money by getting squared off," a user posted on X, formerly known as Twitter.

Similarly, another X user also complained of the ongoing glitch and posted that a glitch of single second is 'dangerous.' While Zerodha said the issue was resolved at 11.50 am, Groww said that it was resolved at 10.41 am.

On June 4, the benchmark Nifty 50 index plummeted nearly 6%, resulting in investors losing approximately ₹31 lakh crore in the stock markets. The combined market capitalization of BSE-listed firms also fell from ₹425 lakh crore to ₹394 lakh crore. As mutual fund values dropped, many investors placed purchase orders to capitalize on the low prices. However, numerous orders were processed the next day, by which time the market had already rebounded by 3%.

Reports suggested that this delay potentially caused investors to lose at least 3% on their mutual fund purchases made on June 4. Additionally, those who invested in exchange-traded funds (ETFs) encountered issues as well, with ETFs trading at a significantly higher price than their actual value.

Investors found themselves caught in a whirlwind of blame-shifting among brokers, the Bombay Stock Exchange (BSE), and the payment aggregator involved. Compounding the chaos and confusion was a notable discrepancy between Exchange-Traded Fund (ETF) prices and their NAVs.

For ensuring a same-day NAV, it is safest to buy directly from the mutual fund websites or apps. The CAMS app states "While some major banks are technically enabled to provide real time credit, not all payment aggregators/AMC may be integrated with all the banks. In such a cases the date of credit to the MF account and unit allotment will happen on     T+ 1. Unit allotment will be subject to receipt of funds in the mutual fund account before the applicable cut off time of 3 pm."

Investors are also advised to use the same bank account linked to their mutual fund folio. Using a different account can result in transaction suspensions that typically necessitate offline rectification, complicating the process further. Additionally, leveraging UPI IDs from the same bank or using BHIM IDs instead of aggregator IDs like GPay, PhonePe, and Paytm can help reduce the risk of such issues in the future.

The June 4 incident serves as an eye-opener, emphasizing the need for seamless coordination among all parties involved in mutual fund transactions to avoid future mishaps.