Harshad Mehta The Man who started the indian stock market revolution

 

The “big bull” and Indian stock market trader Harshad Mehta was one of the high-profile players in the Indian stock market scam of 1992, which went in to the history books as the one of the biggest financial scandals in Indian history. His meteoric rise and even more meteoric fall have been the stuff of public fascination and gossip ever since. This blog is going to take you through Harshad Mehta’s life and times – how he rewrote the Indian capital market landscape, for better or for worse. 

The Rise of Harshad Mehta

Harshad Mehta was born in 1954, in Mumbai and started out as a small time stockbroker. He began working on the stock market in the late 1970s and encountered a rocky beginning. But his big break-moment came in the early 1990s, when he stumbled upon a way to game a loophole in the banking system. This access allowed him to manipulate the stock market in his favour, and, by so doing, created one of the most spectacular bull runs in India.

Mehta’s game plan was a combination of plain old market smarts and financial engineering. He used that influence to create artificial demand for some stocks, causing them to surge. His favourite ploy was the so-called “ready forward” (RF) contract, an overnight loan collateralised by securities between banks. It was those trades that Mehta used to siphon the cash reserves of lots of banks and dump that money into gobs of stock. And his meteoric success with stocks like ACC, Zee Telefilms and others made him a star overnight.

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