Who Is The Wolf of Dalal Street? | Harshad Mehta’s Scam

Welcome to StayInform In today’s article, we will know who is the Wolf of Dalal Street? Now the story goes back to the 1990s, when a name was echoing on the streets of Dalal Street. Harshad Mehta.

Who Is The Wolf of Dalal Street?

People called him Big Bull. He was not just a broker. In fact, he had become an illusion that made the whole of India believe that anyone could get rich very quickly in the stock market.

Harshad was known for his charisma and confidence. He drove big cars, he spoke openly to the media and he would remind even a small investor that he could do anything. But his real game was banking fraud.

Taking Money From Banks

At that time, the lending-borrowing system of government securities, i.e. G6, was very lax. And Harshad used this laxity to his advantage. He kept taking money from the bank that he was not supposed to get.

That too without collateral, just a few signatures and trust. And with that money he bought stocks with which the stock market prices started skyrocketing. When the price of a stock tripled, the media called him a market guru.

And people started investing in the stocks he told them about. That was the magic of Lee Harshad. But behind every bull run, there is debt.

According to Suchita Dalal

Sucheta Dalal published a news story And when this debt became very big, in 1992, a journalist Sucheta Dalal published a story in the Times of India that shook the entire country. The headline was, “The Great Bank Scam”. People came to know that Harshad Mehta had committed a scam of about Rs 5,000 crore.

Rs 5,000 crore by taking advantage of banking fraud and government negligence. After this news, the Sensex crashed. Investors’ savings were destroyed.

And the entire financial ecosystem lost its trust. Harshad was arrested. But the case was so big that it took years to get a legal decision.

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Harshad Mehta died in 2001. But that incident left a permanent scar. There is no God in the stock market.

If everything seems fine, then something is hidden. But the story does not end there. A few years later, another storm arose.

Ketan Parekh Scam

Harshad was not as flashy as he was. But he was intelligent and had a different perspective.

Ketan Parekh used circular trading and low-cap manipulation to set his trap. He chose small stocks that the media and investors did not know much about. Then he kept buying them so that their prices would slowly increase.

Then, he pushed these companies in the media, which attracted the attention of small investors. And when a lot of people jumped into the shares, Ketan Parekh quietly exited and retail investors fell into the trap. He was also known as Ketan Stocks.

Like Visual Soft, Zee Telefilms, Himachal Futuristic etc. All these prices went crazy at some point. But in 2008, when the global markets crashed and liquidity started drying up in India, Ketan Parekh’s bubble burst.

He too was arrested and another accident shook the Indian markets. One thing was common in both these cases – the breakdown of trust.

Loss of The Middle Class Money

Both Harshad and Ketan took advantage of the trust system. And the biggest loss was to the common man. In this section, Santosh Nair said very passionately that these scams were not just a loss of money, they were a loss of dreams of the middle class.

People invested their children’s fees, their parents’ retirement and their savings in the name of money. These events strengthened savings, tightened the audit system and created a new investment culture that was a little cautious, a little skeptical. But it also taught that the street of brokers was not just a place of profit, it was a mixture of money, power and sin.

New Era For The Indian Stock Market

The post-2000 era ushered in a new era for the Indian stock market. Now, the street of brokers was no longer limited to the piles of brokers’ mail and files. It had now changed to a world of clicks and quotes.

Technology had begun to make investing unprofitable. Now, traders who had always been at the mercy of brokers started trading on their mobiles or laptops. Real-time stock prices were visible on the internet.

Start Algo Trading

Information that would have been available three days later was now visible in three seconds. And from here, a new level entered the market. Algorithmic trading.

Algos are programs that execute trades instead of humans. Without fear, without greed, without stopping. These algorithms process hundreds of signals every millisecond and decide when to enter a stock, when to exit.

They are not driven by emotions. They run on data. And that’s where a new inequality is born.

Conclusions

The inequality of momentum. Where an ordinary investor constantly thinks about a stock, an algorithm has already traded that stock. They changed the rules of the game. Where before, price movements were slow, now they are volatile. A small piece of news can move the market 500 points.