Since the regularization of the stock market, after the Harshad Mehta scam of 1992, people’s faith in the stock market has improved.
Investors and common people have been investing in the market under the protection granted by SEBI and this has been a reason behind the flourishing of the market.
The stock market works on several factors, one of which is hope. The political, economic and financial stability of a country impacts this hope, which influences the investors from investing in the stock market. Moreover, the firms which are likely to show profits in the future, as per their growth rate, also attract higher investments through stocks.
One thing which is to keep in mind here is that in every business cycle, there is a boom, recession, depression and then growth. India’s share market remained somewhat unaffected even during the two waves of the COVID-19 pandemic, whereas in the second wave, India’s performance was below average.
People are losing jobs each day and the healthcare system is in ruins, yet the share market continues to rise and several companies continue to earn huge profits through it.
Here, the question arises, are we looking in the eye of a fall in the share market?
I believe that we are, and I have two reasons to back the argument.
Sucheta Dalal Is Back With A Blast
Recently, Sucheta Dalal made a cryptic tweet whereby she mentioned a financial scam. Sucheta Dalal is a Padma Shri awardee financial journalist who made her name after playing an important role in the unveiling and investigation of the Harshad Mehta scam and the Ketan Parekh scam.
This time, Sucheta Dalal took to Twitter to share a piece of financial news. She tweeted that an operator of the share market from the past has returned and he is actively rigging the prices of the shares of one group.
She refrained from mentioning the name, however, several people guessed that it must be some big group considering the aspect of price rigging.
Dalal also stated that a former Finance Minister might be involved in the scam along with certain foreign entities. This happened despite the tight grip of the Securities Exchange Board of India (SEBI) over financial transactions, especially in the sphere of shares and debentures.
Read Also: Watch: World’s Largest Stock Markets
And in other news, SEBI Act might not stay in existence for long!
SEBI Will Not Remain The Same Anymore
In this year’s much-anticipated budget, which left the common man high and dry, the current finance minister, Ms. Nirmala Sitaraman announced that the government is going to consolidate the provisions of the SEBI Act, the Depositories Act, Securities Contract (Regulation) Act and Government Securities Act in one Securities Markets Code.
The government is claiming that they are consolidating these important financial laws with the view of creating a single code for operational efficiency.
However, something similar was done in the case of the Insolvency and Bankruptcy Code which turned out to be problematic. There are several loopholes which the government is still dealing with and operational efficiency is still a far cry.
A single Securities Market Code will be vulnerable, to say the least. Loopholes will be there, which means that if a scam is to break, then there will be several questions of law that will arise to be dealt with before going to the questions of fact.
This will buy the scamsters time and allow them to slide away from the case owing to the legal difficulties.
This chain of events is likely to happen if a scam is unveiled in the securities market around the time when the new code will come into the picture. The legal technicalities will mean a gateway for the accused and a lack of hope for investors. The share prices will fall and if enough cushion isn’t created, the share market will crash.
As much as the heights at which the share market is reaching is bringing a smile on our faces, the big fall might not be far away. It is important to keep an eye on the happenings around us, or else the consequences will be dire.
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This post is tagged under: harshad mehta, scam, sucheta dalal, fianance, stock market, adani, adani shares, share market, adani shares dip, SEBI, securities, law, legal, financial market scam, finance minister, share market crash