One of the biggest stock market scams that have affected investors in India is the Harshad Mehta scam, also known as the “big bull” scam. This scam involved a stockbroker named Harshad Mehta, who manipulated the stock market in the early 1990s through a series of fraudulent transactions.
Mehta was able to manipulate the market by taking advantage of weaknesses in the banking system and using fake bank receipts to fund his purchases of shares. He also used his position as a leading market participant to spread false rumors and manipulate the prices of certain stocks.
Before the scam was uncovered, the Sensex had reached an all-time high of 4,487.21 on April 20, 1992. However, as the extent of the fraud became apparent, the market began to decline, and the Nifty 50 fell to a low of 1,206.70 on July 15, 1992. This represented a decline of 73% from the market peak.
The Harshad Mehta scam had a significant impact on the Indian stock market, leading to a crash in 1992 and causing losses for many investors. The scam also exposed weaknesses in the regulatory system and led to reforms in the market to improve transparency and reduce the risk of future scams.
It is important for investors in India to be aware of this and other stock market scams, and to be cautious when investing in the stock market. This includes conducting due diligence on any investment opportunities, being aware of potential red flags, and seeking the advice of a financial professional when necessary.