Manu Manek Mundra The Cobra Of The Indian Stock Market
The majority of us must have heard of the 1992 securitiesfraud, especiallyin light of the 1992 scam series, which greatly heightened public awarenessof the stock market in the nation. In that online series, Harsha Mehta, the fraud's mastermind, and the enormityof the entire stock market swindle were made clear to us.
Who is Manu Manek Mundra?
But in the same series, we also encountered a cunningstock trader who dominatedthe market prior to Harshad Mehta. Manu Mundra, commonlyreferred to as the "Black Cobra of the Stock Market," is the one and only.As we saw in Scam 1992, Manu Manek used to control the stock market before Harshad Mehta arrived.
The most successful investors and traders, including Rakesh Jhunjhunwala and Rakesh Damani, who may becomethe next big bull of the stock market after Rakesh Jhunjhunwala's passing, used to closely follow him and picked up their first stock market tips and trades from Manu Manek.
Those who were involved in the stock market at the time said that Manu Mundra's influence was so great that directorsof firms were chosen based on his whims and preferences, and they even consulted him beforepaying dividends on stock
He was a bear operator and would use his short selling approachand market influenceto lower the share prices of the firm, as we will see in the blog. If the companiesdid not accept his approval, they used to suffer greatly. In addition, he enjoyed good relationshipswith a lot of brokers who would lend him shares that he would later short in the market.
What made Manu Manek the Black Cobra
To understandthat you must know the meaning of the terms – Bull Cartel and Bear Cartel.
1). Bull Cartel:
Since bulls in the stock market are those who are bullish about the market and anticipatethat it will rise, some of these individuals band together and create a union in order to inject more money into the market and drive up the price of shares.They used to purchase as many shares as they desired in order to boost interest in a specificcompany's stock and maximise their ability to profit by selling the shares at a premium. Harshad Mehta and other membersof the bull cartel made money by raising stock prices.
2). Bear Cartel:
On the other hand, membersof bear cartels used to profit by loweringstock prices; this bear cartel strategy is sometimesreferredto as short selling.In this method, they would borrow shares from brokers with the help of their connectionsand then sell them as much as possible to expand their supply, which would cause a drop in price. They would then repurchasethe shares at a cheaper price and pocket the profit.
Manu Manek becameso successful in the stock market because he had a lot of money that he would lend to other traders so they could buyshares in the market because affordablecredit was uncommonat the time. This is how he was able to build his wealth.He used to charge outrageousannual interest rates of 20% to 30% for that.In return, he would receive informationabout the number of people who trade or invest in the stock market and the stocks they are most interested in, knowledgehe could then utilise to his benefit.
The shares he had borrowedfrom the brokers in the market would then be sold short, increasing supply in the market. When the prices of the shares he is shorting rise, he would then record the profitsby purchasingthem at a cheaper price.As a result, he used to profit from the stock market by lending money and selling shares short, both of which significantly increased his wealth.
3). Forming the bear cartel:
Even though Manu Mundra formerlyhad completecontrol over the stock market, he was aware of the value of scalability and the fact that he could not do it by himself.So, using his name in the marketplace, he established a cartel that, according to a number of reports, includedwell-knownfiguresfrom the stock market like Rakesh Jhunjhunwala and RadhakishanDamani.As a result of their coordination with the brokers and joint control of the entire stock market by shorting positions, this cartel earned the moniker "bear cartel."
Manu Manek stamped his absolute supremacyon the Indian stock market using the aforementionedstrategies and his keen sense of perception regardingthe state and directionof the market, earning him the nickname"Black Cobra of the Indian Stock Market."Up until Harshad Mehta's arrival on the Indian stock market, it was all fun and games for him. Following that, we witnessed some riveting confrontationsbetween these two stock market titans.
Manu Manek vs Harshad Mehta
As far as we are aware, the market had two differenttypes of investors: the Bull Cartel and the Bear Cartel. Here, Harshad recognisedan opportunity that if he could buy these available shares in big quantities, it could turn out to be a profit booking opportunityfor him, similar to how the bear cartel used to lower the price of shares to book profitsby shorting their position.When the bear cartel pumpedin more money, Harshad Mehta utilised the banks to inject more money. The bear cartel had many investors, thereforeto combat this, Harshad initially withdrew money from his investors.
As a broker, he mishandledthe BRs banks gave him for the transfer of monies, which sparked the entire 1992 hoax. Learn everything there is to know about Harshad Mehta, his brother Ashwin Mehta, who was a crucial player in the entire 1992 scandal, and the 1992 securities fraud.Upuntil the hoax was exposed by journalist Sucheta Dalal, which caused the bull cartel to collapse, the bear and bull cartels were neck-and-neckin their competitionto make money utilising the pumping and dumping of stocks approach.
Where is Manu Manek Now
When the 1992 stock market scam came to light, not just the stock market but also the Indian financialand politicalsystems were rocked. When the Securitiesand Exchange Board of India, or SEBI, was established, the stock market underwent stronger checks and balances, overhaulingthe whole financialsystem. Learn everything there is to know about Sebi and its functionin the capital market.
After that, the entire bear cartel broke apart. Rakesh Jhunjhunwala and RadhakishanDamani adopted a differentstrategy for value investing and became well-knownin the Indian stock market, while Manu Manek gradually vanished from the scene and his picture is difficultto find. He purposefully avoided the limelightand is now thought to be deceased.
