Nicholls departed after more than a two-hour stay for a slow 19 from 99 deliveries, but finally found a clean strike when he punched Jack Leach down the ground.
However, Nicholls’ airborne shot deflected off the scrambling non-striker Daryl Mitchell who attempted to get out of the way of the ball.
Mitchell could only succeed in deflecting the shot up in the air to Tom Lees at mid-off who claimed the simplest of catches.
Leach seemed to not know what had happened as his teammates mobbed him in celebration as the Black Caps slumped to 123-5.
Law 188.8.131.52 of the ICC’s official rules state a catch will be deemed fair if: “A fielder catches the ball after it has touched the wicket, an umpire, another fielder, a runner or the other batter.”
Leach said after stumps: “It was unbelievable. I didn’t even know if that was allowed, I’ve never seen anything like it. But Ill take any wicket I can - you get enough that don’t go your way.
“It’s a silly game, isn’t it? It was very unlucky for Nicholls but very lucky for me. The ball came right out of the middle of Mitchell’s bat and Leesy wants me to mention that it was a good catch by him
“I like the fact I have two wickets on the board but, to be honest, I didn’t like the dismissal. It’s not something I’ll re-watch many times.”
New Zealand finished the opening day at 225-5, with Mitchell (78 no) rallying alongside Tom Blundell (45 no). England lead the series 2-0.