Monday, January 21, 2008

Major Crashes in Sensex.

Date----------------------------sensex
----------------------------------------------
21-jan-2008---------> 1408.35 [ 7.41% ] down .

Reason :
  • US recession fear.
  • Heavy selling pressure.
  • Global Worries.
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18-may-2006--------> 826 pt.[ 6.76 %] down.

Reason :

  • On account of government circular on taxing investment gains .
  • Heavy selling by FII'S & retail investors .
  • Weakness in global market .
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28-april-1992--------> 570 pt. [ 12 %] down.

Reason:
  • On account of Harshad Mehta securities case .
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17-may-2004---------> 565 pt. down.

Reason:
  • On concern over NDA losing elections to loses BJP
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Some more information about Harshad Mehta scam :

Life:
Harshad Mehta was an Indian stockbroker and is alleged to have engineered the crash in the BSE stock exchange in the year 1992 .
In the late seventies every evening Harshad and Ashwin started to analyze tips generated from respective offices and from cyclostyled investment letters, which had made their appearance during that time.
In the early eighties he quit his job and sought a job with stock broker P. Ambalal affiliated to Bombay Stock Exchange (BSE) before becoming a jobber on BSE for stock broker P.D. Shukla
In 1981 he became a sub-broker for stock brokers J.L. Shah and Nandalal Sheth. After a while he was unable to sustain his overbought positions and decided to pay his dues by selling his house with consent of his mother Rasilaben and brother Ashwin. The next day Harshad went to his brokers and offered the papers of the house as guarantee. The brokers Shah and Sheth were moved by his gesture and gave him sufficient time to overcome his position.
After he came out of this big struggle for survival he became stronger and his brother quit his job to team with Harshad to start their venture GrowMore Research and Asset Management Company Limited. While a brokers card at BSE was being auctioned, the company made a bid for the same with financial assistance from Shah and Sheth, who were Harshad's previous broker mentors.
He rose and survived the bear runs, this earned him the nickname of the Big Bull of the trading floor, and his actions, actual or perceived, decided the course of the movement of the Sensex as well as scrip-specific activities. By the end of eighties the media started projecting him as "Stock Market Success", "Story of Rags to Riches" and he too started to fuel his own publicity. He felt proud of this accomplishments and showed off his success to journalists through his mansion "Madhuli", which included a billiards room, mini theater and nine-hole golf course.
During his heydays, in the early 1990s, Harshad Mehta commanded a large resource of funds and finances as well as personal wealth.
In April 1992, the Indian stock market crashed, and Harshad Mehta, the person who was all along considered as the architect of the bull run was blamed for the crash. It transpired that he had manipulated the Indian banking systems to siphon off the funds from the banking system, and used the liquidity to build large positions in a select group of stocks. When the scam broke out, he was called upon by the banks and the financial institutions to return the funds, which in turn set into motion a chain reaction, necessitating liquidating and exiting from the positions which he had built in various stocks. The panic reaction ensued, and the stock market reacted and crashed within days.He was arrested on June 5, 1992 for his role in the scam.

The Harshad Mehta induced security scam, as the media sometimes termed it, adversely affected at least 10 major commercial banks of India, a number of foreign banks operating in India, and the National Housing Bank a subsidiary of the Reserve Bank of India, which is the central bank of India.
A number of people holding key positions in the India's financial sector were adversely affected, which included arrest and sacking of K. M. Margabandhu, then CMD of the UCO Bank; removal from office of V. Mahadevan, one of the Managing Directors of India’s largest bank, the State Bank of India.
Harshad Mehta was arrested and investigations continued for a decade. During his judicial custody, while he was in Thane Prison, Mumbai, he complained of chest pain, and was moved to a hospital, where he died on 31st December 2001.
The Special Court in Mumbai of Justice D. K. Deshmukh, constituted under the Trial of Offences Relating to Transactions in Securities Act, 1992, has convicted the former Chairman and Managing Director of UCO Bank, K. Margabanthu for his involvement in the Harshad Mehta-perpetrated stock market scam of 1992.
The court also convicted the former General Manager of UCO Bank, R. Venkatkrishnan and Assistant General Manager, S.V. Ramanathan. Besides, two National Housing Bank officials, C. Ravikumar, and Suresh Babu were also convicted. While Harshad Mehta expired during the trial, his employee, Atul Prakash, was convicted. The sentences range from six months of imprisonment to three years.
The Central Bureau of Investigation (CBI) registered this case in June 1992 and the charge sheet was filed in June 1993. Active trial in this case started from January 2002. The officials of the UCO Bank who have been pronounced guilty illegally borrowed Rs. 40 crores in the call money market and placed it at the disposal of the late Harshad Mehta. Call money transactions are between banks or financial institutions in which brokers have no role.
While Margabanthu and Venkatkrishnan have been awarded six months rigorous imprisonment and a fine of Rs. 1 lakh each, Ravi Kumar was sentenced to three years rigorous imprisonment and a fine of Rs. 1 lakh. Suresh Babu was awarded a one-year sentence and Rs. 50,000 fine, Ramanathan has to undergo one month rigorous imprisonment and a fine of Rs. 10,000. Atul Prakash was given 15 days rigorous imprisonment and a fine of Rs. 10,000.

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