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Manu Manek: The Cobra of Indian Stock Market - YouTube
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Welcome, Today we'll talk about Manu Manek.
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Who was called Cobra or Black Cobra in the 1980s and 1990s.
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If you've watched the Scam 1992 web series,
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You must have seen that there're 2 types of cartels.
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Bull Cartel & Bear Cartel.
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Let's talk about What is bull and bear cartels?
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People who were in the bull cartel, like Harshad Mehta,
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He earned money by increasing stock prices.
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People in bear cartel used to earn by decreasing stock prices.
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This technique of the bear cartel is also called short selling.
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In those days, whether it was the bear cartel or the bull market,
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Both cartels used the scheme of pump and dump.
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Let's talk about how the bull cartel used pump and dump scheme
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People of the bull cartel like Harshad Mehta,
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First, they used to buy a stock,
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and used to increase stock price by manipulating it.
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When price increased, they made a profit by selling those stocks.
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There're 3 steps in it. 1st is buying shares.
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Then pumping share's price by manipulating it.
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And then selling those shares or dumping them.
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That's why it's called a pump and dump scheme.
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People of both cartels who used to manipulate share's prices,
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They were called operators.
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On the opposite side was the bear cartel.
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Manu Manek was the main player in the bear market.
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There were many people with him in the bear cartel.
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Bear cartel members used to wait for an increase in share price.
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When they thought that the share price is too high,
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Then they used to do short-selling.
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In short selling profit increases as share price decreases.
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Manu Manek and other members of the bear cartel used to think,
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If the share price is too high, they used to short-sell it.
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And sometimes they used to decrease share price by manipulation.
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They used to buy shares when the price went too down.
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And used to make a profit.
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Manu Manek was a very strong bear operator.
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He used to rule over BSE before Harshad Mehta came.
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People of that time who were connected to the stock exchange,
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and KR Choksey says that,
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Companies that were listed on the stock exchange
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had to take approval for Manu Manek for many things.
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If they want to change the director,
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Then also they needed to have the approval of Manu Manek.
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They had to ask Manu Manek for company's dividend and other works
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If a company didn't take approval from Manu Manek,
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Or was at conflict with Manu Manek,
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It made the company suffer a lot.
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Because Manu Manek was a bear operator.
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He could pull down the share price of any company by his choice.
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That's why companies on the stock exchange were afraid of him.
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There were many operators in Manu Manek's bear cartel.
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In all of them, 3 Rs were very powerful.
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One of the 3 Rs was Charter Raju and you must know others.
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Manu Manek was a strong operator because he had too much money.
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He used to give money on interest to stock investors.
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People in the stock market at that time
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used to borrow money from Manu Manek at 20-30% pa.
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Since, most people used to borrow money from Manu Manek,
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He used to know who is taking money and where he is investing.
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As soon as Manu Manek used to know that they had bought shares,
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and the share price has increased too.
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People have no money left who bought those shares.
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Then Manu Market entered the stock market and start short-selling
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And made a profit by dropping the share price.
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Manu Manek's plans and strategies and used to work until
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Harshad Mehta was not in the stock market.
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Harshad Mehta started manipulating stock market on a large scale
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He diverted his client's and bank's money into the stock market.
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The bear cartel had no idea that
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Harshad Mehta can bring so much money.
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After the share prices had increased a lot,
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Bear Cartel to have a short position on it.
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And then Harshad Mehta used to pump it more with his funds.
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Due to which the bear cartel had to face loss continuously.
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They had lost too much in Infrolis shares because
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Share's price was increased by Harshad for many years
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Price never came down and the bear cartel faced losses.
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Because in short-selling you make a profit when price drops,
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And you loose when price increases.
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When Harsad Mehta was arrested, then the bear cartel relaxed,
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Many people of the bear cartel had said that,
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If Harshad had his position for 7 more days,
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Then we would have to come to the streets with a bowl.
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1 more company was performing well on the stock exchange in 1980
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Which was Dhirubhai's Reliance.
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It wasn't easy to get capital at that time for companies.
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The company's promoters had to convince their investors.
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Then people used to invest in IPOs.
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That's why Dhirubhai went to villages and towns,
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to convince investors to investors to invest in Reliance's IPO.
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Investors agreed and the company was performing well.
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In between Manu Manek got his eyes on Reliance.
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He started short-selling Reliance's stocks.
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And started pulling down stock's price.
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Dhirubhai knew, that if investors aren't happy,
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The company will have difficulties in raising capital in future.
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Reliance's business was performing well.
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Financial performance was also good.
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But Manu Manek was shorting its shares,
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and lowering its price by manipulating it.
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That's why Reliance's share price was continously falling.
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But at that time, Manu Manek didn't know about Dhirubhai.
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It's said that he brought Anand Jain to support him.
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Anand Jain started buying Reliance's shares in large quantities.
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Due to which Reliance's share price started increasing.
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Due to which Reliance's share price continuously increased.
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Manu Manek and the bear market were short-selling in Reliance.
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i.e Selling shares and Anand Ji and his associates,
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were buying the shares that the bear cartel was selling.
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Due to which Reliance's share demand was maintained in market.
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And share prices continuously increased.
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The bear cartel was troubled by increasing share prices.
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They started having losses.
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There was no derivates market in India.
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i.e Futures and Options weren't there.
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Today, you can easily short-sell using futures & options.
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Because of no derivative market at that time,
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Method of short-selling was completely different at that time.
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In short-selling you first sell shares.
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i.e You sell those shares which you don't have.
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For this, short-sellers or people from the bear cartel
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They used to borrow shares from stockbrokers,
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and used to sell those stocks.
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And returned them when prices used to fall.
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i.e Borrow shares from a stockbroker and sell them in the market,
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and buy them back at a low price and return them back.
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The Short-Selling process was like this at that time.
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But in this case of Reliance,
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Shares that the bear market was borrowing from the broker,
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and selling in the market.
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Anand Jain and his associates were buying those shares.
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At last, all shares that the bear cartel sold,
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All shares were bought by Anand Jain and his associates.
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After waiting for some time,
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The bear cartel had to return those shares to the broker.
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But Anand Jain and associates weren't selling their shares.
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Due to which the bear cartel faced a lot of troubles.
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They weren't able to buy shares to return them to the broker.
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Due to this problem, BSE was closed for few days.
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Manu Manek and the bear cartel had to lose against Dhirubhai.
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So this was Manu Manek and his story.
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