Manu Manek Mundra the Cobra of the Indian Stock Market
Manu Manek Mundra the Cobra of the Indian Stock Market
Most of us must have heard of the 1992 securities scam and more so after the scam 1992 series which created a huge buzz in the country regarding the stock market. In that web series, we got a hang of the magnanimity of the whole stock market scam and the mastermind of the fraud- Harsha Mehta.
Who is Manu Manek Mundra?
In Scam 1992 series, we came across another shrewd stock market broker who ruled the stock market in those times before Harshad Mehta. That person is none other than Manu Manek Mundra, also known as the Black Cobra of the stock market.
In Scam 1992 the role of Manu Manek was played by the late Actor Satish Kaushik who recently passes away after suffering a Heart Attack at the age of 66.
As we have seen in Scam 1992 that how Manu Manek used to make the stock market dance to his tunes before the arrival of Harshad Mehta and most successful investors and traders like Rakesh Jhunjhunwala and Rakesh Damani who was a bear at that time but now is expected to be the next big bull of stock market used to closely follow him and learned their initial tricks and trades of the stock market from Manu Manek.
Some who were associated with the stock market during those times say that his influence was so strong that directors of companies were elected on the whims and fancies of Manu Mundra and companies also used to consult him before paying dividends on stock.
If the companies did not take his approval then they used to suffer a lot as he was a bear operator and he would bring down the share prices of the company by using his short-selling technique and influence over the market. Apart from that he had great relations with many brokers who used to lend him shares which he would then short in the market.
What is Manu Manek’s net worth?
At the time of his death, Manu Manek’s net worth was estimated to be around $50 million.
Manu Manek Real Photo
Manu Manek Early life
According to what is known from sources Manu Manek was born in Kolkata in the late 1940s and early 1950s. He began working in the stock exchange just after completing his graduation and initially, he learned the ins and outs of the market from the sidelines but gradually cracked the stock market and earned significant returns.
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What made Manu Manek the Black Cobra?
To understand that you must know the meaning of the terms – Bull Cartel and Bear Cartel.
1). Bull Cartel
As we know that in the stock market bulls are people who are bullish about the market and expect the market to rise, who were in the bull cartel like Harshad Mehta, they earned money by increasing stock prices.
They used to buy as many shares as they wanted so that the demand for the shares of a particular company increases and they could book profits by selling the shares at high prices.
2). Bear Cartel
On the other hand people in bear cartels used to earn by decreasing stock prices and this technique of bear cartel is also known as short selling.
In this technique, they used to lend shares from brokers using their influence and sell them as much as they can in order to increase their supply which in turn would lead to their fall in price and then buy those shares at a lower price and book profits.
The secret of Manu Manek’s wealth creation- Manu Manek was so powerful in the stock market because he had lots of wealth which he would lend to other traders to buy shares in the stock market as cheap credit was a rarity in those times. For that, he used to charge exorbitant yearly interest rates of 20% to 30%.
In exchange, he would also get information that how many people are trading or investing in the stock market and which stock they are targeting which he would use to his advantage.
He would then use his strong position in the stock market by selling short the shares he used to lend from the brokers in the market and create more supply in the stock market and when the prices of the shares he’s shorting he would book the profits by buying them at a lower price.
Thus, he used to earn from the stock market with these two ways of lending and shorting shares which added enormously to his wealth.
3). Forming the bear cartel
Although Manu Mundra used to control the stock market, he knew the importance of scalability and the fact that he alone could not control the entire market. So, he used his name in the market and formed a cartel of which according to several sources had prominent stock market faces such as Rakesh Jhunjhunwala and Radhakishan Damani.
This cartel came to be known as the bear cartel which coordinated with the brokers and together controlled the whole stock market by shorting their positions.
Using the above techniques and his strong sense of judgment regarding the mood and direction of the market Manu Manek stamped his sheer dominance on the Indian stock market and came to be known as the Black Cobra of the Indian stock market.
It was all fun and games for him until Harshad Mehta arrived in the Indian stock market. Post that we witnessed some enthralling battles between both these stock market stalwarts.
Manu Manek vs Harshad Mehta
As we know that there were two kinds of investors in the market – Bear Cartel and the Bull Cartel. As the bear cartel used to lower the price of shares to book profits by shorting their position, here Harshad saw an opportunity that if he could buy these available shares in large quantities, then it could turn out to be a profit booking opportunity for him.
The bear cartel had many investors and to counter this Harshad first took money from his investors but when the bear cartel pumped in more money, Harshad Mehta used the banks to pump in more money.
As he was a broker, he misused the BRs given to him by banks for the transfer of funds which led to the whole scam of 1992. Get to know about Harshad Mehta, his brother Ashwin Mehta who played a major role in the whole 1992 fiasco, and the whole 1992 securities scam in detail.
The bear and bull cartel were in a neck-to-neck fight in the race to earn profit by using the pumping and dumping of stocks strategy until the scam was unfolded by journalist Sucheta Dalal which led to the downfall of the bull cartel.
Manu Manek vs Dhirubhai Ambani
With solid fundamentals, Reliance was a new entrant in the stock market. Reliance went public during Manu Manek's rule in 1977 under Dhirubhai Ambani's leadership.
During the 1980s, Manek's attention was drawn to Reliance. It is important to note that Dhirubhai was not just a head who would allow his shareholders to suffer the consequences of his decisions.
He treated his investors as family members and held them in high regard. He immediately reacted when he got to know the cobra had attacked his company. As his son Mukesh Ambani's classmate and close friend, he asked Anand Jain to lead the charge.
Following the bear cartel's expectations, they began selling their shares. As a result, Anand Jain and other loyalists bought the shares that were being sold by the bears. The price of Reliance rose not only as a result of this counter-plan.
As a result of continuous selling, the bears found themselves in a pickle. Their shares were sold at a lower price than they owned.
Where is Manu Manek Now?
Once the stock market scam of 1992 unfolded, the Indian financial and even the political system of India was taken by storm let alone the stock market. The Securities and Exchange Board of India popularly known as SEBI came into being and the whole financial system was overhauled with stricter checks and balances in the stock market. Get to know in detail what Sebi is and its role in the capital market.
After it the whole bear cartel also cracked up with Rakesh Jhunjhunwala and Radhakishan Damani turned to a different approach to value investing and made a name for themselves in the circles of the Indian stock market whereas Manu Manek faded gradually from the Indian stock market scene and Manu Manek’s real photo is also not available easily. He consciously kept himself away from the spotlight and is believed to be dead now.