“Bas waqt ki baat hai mere jaisa ek aur ayega”
(Translation: It’s just about time, there shall another one like me.)
-Harshad Metha
In the ‘90s when Harshad was enjoying his lavish lifestyle at that time many people were getting inspired by him. At that time bear cartel nineties were thinking of how to stop the Harshad’s Bull run On the other hand Ketan Parekh was a chartered accountant and was handling his family business NH Securities which was a stockbroking firm. Ketan was inspired by Harsbad Metha and was willing to become like him He soon realized that if he wants to become rich then he had to think like the rich and have to work with them. So, he decided to work with GrowMore Investments where he meets Harshad. He expressed to Harshad that he wants to play as big as he can. Harshad advised him that research and study is not the only way to play big he said “Money attracts money”. In 1991, Canfina Mutual Fund scam Ketan Parekh was sentenced to 1-year imprisonment. In 1997, Ketan Parekh started making a grip, not on the Bombay Stock Exchange but Calcutta Stock Exchange. In CSE also every broker, player, or rich operator was knowing that someone is silently playing big here. But now the influencer of Ketan Parekh was as same as Harshad’s, But he learned 3 things from Harshad Mehta Scam, first if he does boast his lavish lifestyle then people will be jealous of him which will affect him in one way or other. Second, if he wants to make more money so he has to invest more money which will be sponsored by the institution FIA’S Bank and promoters. Third that he will not take the market up instantly, he will gradually take the market up then he will sell the stock and then again buy the stocks to raise the price. In CSE the favorite stock of Ketan was of ITC he was also the operator of this. In today’s world, the most successful traders who say had they are here in the market for 15-20 years had illegally traded. Then a twist comes when the bear cartel rumors the market that Ketan had committed suicide but Ketan had decided that he won’t be coming in more in front of people which made people believe that the rumors were true. Which directly resulted in the downfall of the ITC stock. Bear Cartel was successful in reducing the price of ITC. Gradually Ketan cleared these rumors but the ITC had a very steep dip in the market. In 1998, Ketan started operating on the ACC stock but due to the Pokhran Nuclear test, the market was prone to more bad news, and also due to USSR trades the political background lead to bad news in the market which leads to the failure of ACC trading which caused a huge loss to Ketan. This made the bear cartel happy. But this comeback of Ketan was the biggest as he was coming with multiple brokers this time. He started targeting some stocks like Zee, Adani, HFCL, SL, DSQ, Candela, etc. Why was he only targeting IT stocks as in 1995 he read a report “The Age of Internet which made the internet is the future. Ketan knew that if he wants to make money he had to invest in IT stocks. The stocks whose trading volume was 1000 stocks per day, at the end of May, the trading volume of the stocks reached 10-15 lacks per day. He was using 2 strategies: first, Bump and Dump in which 20 to 30% of shares of the company is bought which spikes the prices then investors show their interest and the prices then investors show their interest and the price goes up again, then when the prices were at its highest Ketan start dumping the shares in the market. Second, Circular trading in which mutual traders trade between themselves increases the trading volume this makes the investors show interest in them who focus on the trading volume of the stocks. The investors start buying this stock which makes the prices go high then Ketan sells these stocks this is also called Badla System. He was only focusing on 10 stocks- HFCL, MUKTA, TIPS, Amitabh Bachchan Corporation, PNCC, Pentamedia, GTL, Zee, CC, AFTEK which was generally called K10 stocks. He took HCFL stock from 42rs to 2300rs, Zee stock from 750rs to 11000rs, and GTL from 85rs to 3100rs. Then he used Payment Order Instrument and took a loan of 800 crores from MMC bank and 100 crores from Global Trust bank. By the guideline of RBI, the bank is not allowed to give a loan of more than 15 crores to a broker. The loan given by the MMC was demanded by a broker. In pay order what happens is that the person had to pay the money to the bank in return they get a pay order but in the case of Ketan, he got the pay order without giving the money. The cheque of Ketan was passed by the Bank of India. The loan given by the MMC was demanded by the Bank of India but MMC wasn’t able to give it back which caused a loss of Bank of India. As he paid 7 crores only. So the Bank of India filed a case on Ketan Parekh and he was arrested by CBI. He wasn’t able to give 130 crores as the bear cartel was very active at that time. After this scam, he was banned from the stock market till 2017 and was also imprisoned for 2 years.