– Commercial –
The yr 1992 will go down within the historical past of India because the yr of the inventory market rip-off. Harshad Mehta, a dealer, recognized for his rags-to-riches story and a poster boy for some traders, had used receipts of public sector banks to control inventory costs.
Mehta siphoned off about Rs 1,000 crore within the banking system to get shares on the Bombay Inventory Change. Since he pumped in cash, the markets continued to achieve new highs. Retail traders took cues from what Mehta was buying and adopted within the footsteps of their large Bull’.
Within the interval between April 1991 and April 1992, the Sensex went right into a frenzy and returned 274 %, shifting from 1,194 factors into 4,467. That’s the highest annual yield for the indicator.
The rip-off got here to mild when the State Financial institution of India reported a shortfall in authorities securities. That led to an investigation that afterwards confirmed that Mehta had manipulated round Rs 3,500 crore within the system. On August 6, 1992, following the rip-off was uncovered, the economies crashed by 72 % resulting in one of many best drops together with additionally a bearish part that lasted for a few a long time.
Mehta was jailed in 1992. In 1995, he precipitated a furore when he claimed that he made a contribution of Rs 1 crore to PV Narasimha Rao, the then prime minister, and the ruling Congress to set him free. He died in jail on December 31, 2001, after a cardiac arrest.
It was across the time Ketan Parekh, yet one more inventory agent has been probed for utilizing financial institution and promoter funds to control inventory costs. Like Mehta, Parekh was later convicted and prohibited from buying and selling.
Sucheta Dalal, a journalist that broke the Harshad Mehta rip-off and in addition investigated the Ketan Parekh state of affairs, is perturbed from the similarities. “Solely in India will you discover two scams which might be so equivalent and which occurred in a span of simply 10 years,” she states.
– Commercial –