Picture: 123RF/RASSLAVA
Picture: 123RF/RASSLAVA

Mumbai/New Delhi — India’s financial capital saw its worst blackout in decades because of a grid failure, disrupting transport networks and briefly hitting trading volume in bond markets.

Mumbai, home to India’s biggest stock exchanges, financial regulators and the central bank, witnessed a power outage at about 10am local time. Power tripping — or an overload in the circuit that forces the system to shut down automatically — was the reason for the grid’s collapse, according to local power utility Tata Power. 

Electricity is gradually being restored across the island city.

BSE and National Stock Exchange of India continued to function normally. But trading volumes in the fixed-income market dropped as many traders, sheltering from the coronavirus pandemic at home, failed to complete trades. Some rail services were halted, while airport operations and hospitals remained unaffected.

The city of 20-million people accounts for about 6% of the $2.9-trillion economy. While Mumbai has largely been immune to the daily power outages that plague large swathes of the nation, a long and widespread blackout in the capital of India’s most industrialised state would make it harder for Prime Minister Narendra Modi to revive an economy that shrank 24% in the quarter ended June.

“In my 18 years in Mumbai, I haven’t come across such a widespread disruption right in the middle of the busiest time for equity markets,” said Chokkalingam G, chief investment officer at Equinomics Research and Advisory in Mumbai, whose home still doesn’t have power. “Especially during a pandemic a recurrence of such an event isn’t good.”

The country had experienced a major power outage in 2012 affecting 360-million people due to a grid failure, while a glitch at a power station of Tata Power in 2014 led to disruption in parts of Mumbai. Modi is seeking to spend about $350bn in energy infrastructure by March 2025, most of it in building conventional and nonconventional power plants along with transmission and distribution networks to fulfil his pledge for providing round-the-clock clean energy for all by 2025.

Mumbai has not seen a power outage as wide as Monday’s in decades. Banks and other vital institutions in India’s financial hub therefore presume uninterrupted supply or minimum disruptions and don’t have long power backup.

“In the last six months, most of our meetings and discussions are online and today they were delayed,” said Sameer Kaul, CEO at TrustPlutus Wealth Management. “Power outages in Mumbai, if any, are usually sorted out fairly quickly.”

Bond traders said trading volumes narrowed immediately after the outage but recovered later. Sovereign bonds extended gains, with the yield on 10-year bond falling four basis points to 5.90% while the S&P BSE Sensex pared gains to trade little changed as of 2.33pm in Mumbai.

Bloomberg

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