Trading on National Stock Exchange (NSE) was halted for around 15 minutes on Friday morning as freak trades triggered a 15 percent drop in the Nifty.
The exchange said it was investigating what it called "abnormal orders resulting in multiple trades at low prices."
The Nifty suddenly dropped by around 920 points to a session low of 4,888.20 points - 15.5 percent below its closing level on Thursday.
"There was a freak trade in the cash segment which hit the circuit filter. However, the futures and options segment has not been affected," a source at the exchange told Reuters. "As a result, markets stopped but trading was resumed soon after."
NSE futures and options markets traded as normal throughout, while trading on Sensex was also uninterrupted.
Some financial and blue-chip stocks, including State Bank of India, mortgage lender HDFC and cigarette maker ITC fell sharply before trading was halted.
In April, a sudden drop in Nifty futures sparked speculation of an erroneous trade, but the exchange said no errors had been spotted on its trading systems.