July 14, 2023 – RajkotUpdates.News Correspondent
The 1992 securities scandal that rocked India has been associated with Harshad Mehta in the annals of financial history. Both financial specialists and the general public are fascinated by Mehta’s ascent to fame and subsequent fall from favour. In this article, we explore the fascinating tale of Harshad Mehta’s bull run and how it affected the Indian stock market.
Mumbai-based stockbroker Harshad Mehta, also known as the “Big Bull,” had a significant impact on the dynamics of the Indian stock market in the late 1980s and early 1990s. He became a famous with his cunning strategies and unflinching confidence, leaving a permanent imprint on the financial scene.
Early in the 1990s, the The Indian stock market was going through a time of rapid expansion and confidence. In this setting, Harshad Mehta carried out a bold scheme to manipulate stock prices and take advantage of banking system flaws. Mehta obtained enormous sums of money from banks using his deceptive methods known as the “ready forward” (RF) agreements, using government securities as security.
As a result of this inflow of cash, Mehta started to raise the prices of a few certain stocks, sparking an unheard-of bull run in the stock market. Mehta’s strategy was characterised by a concentration on the stocks of blue-chip corporations, notably in the banking and finance industries. These stocks’ values surged, boosting investor confidence and sparking a purchasing frenzy.
Effects of Mehta’s The bull run was felt all around the nation. Common investors, often known as “Mehta’s followers,” invested their funds in the stock market in an effort to profit from the rising prices. Mehta’s media storm increased the speculative activity and attracted more investors.
The enthusiasm soon faded, though, as is typical of financial bubbles. The cracks in Mehta’s empire were made clear by the stock market meltdown of 1992. When it was discovered that Mehta had been using false bank receipts to get money and manipulate stock prices, the scheme was exposed. The shock of the news rippled across the financial system, causing panic selling and a sharp decline in stock prices.
Mehta’s bull run had a negative impact that was significant. Indian stock market experienced a severe decrease that destroyed the fortune of investors by billions of dollars. The controversy awoke the regulatory authorities, who then launched reforms to toughen the regulatory environment and stop similar occurrences in the future.
It is important to acknowledge the long-lasting influence Harshad Mehta had on the Indian financial sector notwithstanding the ignominy that surrounds his name. In the years that followed, there were substantial reforms as a result of his bull run, which brought attention to the need for stricter rules and greater transparency in the stock market.
The Harshad Mehta affair serves as a reminder of the inherent perils and risks of unchecked speculation in financial markets as we look back on it now. The legend of the “Big Bull” continues to serve as a warning to be watchful and cautious in our quest. of monetary success.
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