How capital markets are inherently a great ball of fire with millions of brains working at random and still finding a structure, has always amazed me. So in this random uncontrollable act of decisions, can a few people shape the market? As crazy as it may sound, it is true. It is very real for a set of people to play a stock and such cartels are operational and active.These cartels usually act in groups of 4-6 or more with an average holding of Rs 30-40 crore in cash and are usually from different parts of the country. They use Demat accounts of family members (12 or more) to systematically ride a stock and when the demand is spiked, they sell and get out.
Think of it as you buying something worth Rs 100 crore and in the process generating a demand for Rs 200 crore and thus shooting up the price. When the time is right, you sell your share and get out, making a lot of money in the process. Realistically speaking, what these guys do is just buy and sell and no one can stop them from doing that. If someone is willing to sell a stock worth Rs100 crores then why should they be stopped from buying, after all they are paying the fair price, aren't they?
The topic is debatable but the fact is that the Capital Markets are not a place for a low income earner with small savings, unless he decides to remain invested for 5 years or more. The odds otherwise are always stacked against him. In the ocean, the Big fish eat the Small ones.
4 comments:
But isn't it illegal? A couple of years back Karvy was in trouble for having opened several Demat accounts for the same person or for fictional people.
In one of the cases a person had opened over 50 accounts using pseudo names and this lead to alot of mayhem in the markets.
it is not one person opening several accounts in this case but instead having access to 12 or more accounts via family members and using these to spread the transactions on a stock.
What you are mentioning might hold good for such a situation. But I'm referring to the Karvy case where a single person opened several accounts. Although it was 1 person who opened all the accounts fictitous names were used
Yes Meera. But in the context of these market cartels its different. These people are very well organised and know the guidelines for trading in the market very well and they understand the system. As long as the demat accounts are in different names but provide access to spread a large trade, they serve the purpose without arousing suspicion. The idea is to tweak the system, take advantage of the loopholes in it and make money. The SEBI cant do nuts if all you are involved in is genuine buying and selling of shares.
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