- RPG Group Chairman Harsh Goenka warns retail investors of potential ‘severe losses’ in the booming stock market.
- Goenka claims that malpractices from the Harshad Mehta and Ketan Parekh era are resurfacing, particularly in Kolkata.
- The business leader alleges that stock prices are being driven to unrealistic levels as promoters inflate profits in collusion with Gujarati-Marwari brokers.
Harsh Goenka, Chairman of RPG Group, raises concerns about potential severe losses for retail investors due to alleged malpractices in the booming stock market. He calls for intervention from SEBI and the Finance Ministry.
Goenka’s Warning to Retail Investors
Harsh Goenka took to social media to express his concerns about the current state of the stock market. He warned that malpractices from the Harshad Mehta and Ketan Parekh era are making a comeback, especially in Kolkata. According to Goenka, promoters are inflating profits and, in collusion with Gujarati-Marwari brokers, driving their stock prices to unrealistic levels. He urged SEBI and the Finance Ministry to step in and investigate before small investors suffer severe losses.
Appeal to Authorities
Goenka also appealed to top authorities including the finance ministry and capital markets regulator Securities and Exchange Board of India (SEBI) and urged them to intervene and conduct investigation to curb ‘severe losses’ that retail investors may incur due to the inflated market conditions. This appeal follows a sharp decline in the stock market, with the BSE Sensex plunging 1,000 points intraday, falling below the 74,000 mark. The NSE’s Nifty dropped by more than 200 points, slipping below the 22,450 level. Volatility index India VIX dropped nearly nine per cent to a level slightly below 15, indicating nervousness in the market.
The Harshad Mehta Scam
In the early 1990s, the Harshad Mehta scam was the most widely reported financial scandals in India’s market and banking history. Mehta, a regular stockbroker at the Bombay Stock Exchange, exploited loopholes in the banking system to manipulate the stock market. He indulged in ‘stock price rigging’ where he artificially inflated the prices of some selected stocks, creating a frenzy of buying. Mehta’s malpractices led to an overwhelming rise in the BSE index. He was also accused of defrauding the State Bank of India (SBI) worth around ₹500 crore against forged cheques signed by corrupt officials and failed to deliver the securities.
Conclusion
Goenka’s warning serves as a reminder of the potential risks in the stock market, particularly for retail investors. It is crucial for regulatory bodies like SEBI and the Finance Ministry to take note of these concerns and take necessary actions to protect investors. The stock market, while offering significant potential for profit, also carries inherent risks that investors must be aware of.
