June 10th 2024.
A recent petition has been brought to the attention of the Supreme Court, urging both the Centre and the Securities and Exchange Board of India to provide a thorough report on the significant stock market drop that occurred on June 4th, the same day the results of the general elections were announced. This plummet resulted in a loss of Rs 30 lakh crore, the largest in Indian history. The petition highlights the fact that the market initially saw a surge after the exit poll results were released, but took a sudden turn for the worse when the actual results were announced. This raises concern about the effectiveness of the regulatory system, despite previous orders from the Court.
It all started on May 31st, a day before the last phase of the general elections, when the National Stock Exchange experienced an unusual amount of activity. The trading volume for shares doubled from the previous day, with a large portion of the trades being made by foreign institutional investors who had been selling Indian shares for multiple sessions. Then, the following day, exit polls predicted a clear victory for the BJP-led NDA.
It is common knowledge that investors prefer a stable government for policy continuity and less risk. So, when the benchmark indices Sensex and Nifty reached all-time highs on June 3rd, based on the exit poll predictions, it was a positive sign for the market. The Sensex even reached a new closing peak of 76,469, resulting in significant profits for FIIs. However, the next day brought a sharp decline as the actual election results showed that the BJP was far from the expected 272 seats. The Sensex dropped by 4,390 points or 6%, settling at 72,079.
This was the largest single-day crash in four years, with retail investors bearing the brunt of the losses. It was a true "blood bath," as described by many. But before this chaos ensued, something even more suspicious had taken place. Key figures in the government, including former Union Home Minister Amit Shah, Prime Minister Narendra Modi, and Finance Minister Nirmala Sitharaman, had given investment advice to the public, urging them to buy before June 4th as the market was expected to hit all-time highs after the election results were announced.
Congress leader Rahul Gandhi has accused Modi and Shah of being directly involved in the "biggest stock market scam" and has called for a joint parliamentary committee investigation. He has also questioned why the Prime Minister and Home Minister were giving specific investment advice to the 5 crore families who invest in the stock market. These events have raised serious concerns, especially as more and more common people are investing in equities instead of traditional bank fixed deposits. It is alarming that such advice is coming from the top officials of the government, showing a lack of awareness of the ground realities of the country.
In the end, it is up to the 5 crore investors to make informed decisions and not be swayed by unsolicited advice from individuals they may not trust. This situation highlights the need for a robust regulatory system and transparent governance to protect the interests of the people.
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