That Narendra Modi talked up the market, an allegation made by his bête noire Rahul Gandhi, so that he and his crony capitalist friends would make money out of the gullible retail investors stretches credulity. In his feverish imagination, all these guys dumped their shares on poor retail investors at staggering prices knowing pretty well that the BJP was in for a drubbing. It is a misconception that investors’ wealth melts when there is a crash as it happened on June 4, the day of reckoning for our political parties because in the next few days the so-called evaporation of Rs 30 lakh crore of investors’ wealth was made good to the extent of 70% by the subsequent recovery on news of BJP coming back to power despite falling short of majority. The trouble is that the media and pundits mistake valuation for actual selling price. To wit, a promoter owning 50% of the shares of his company would not have got the fabulous price on the trading day after the exit polls when the market recorded a record gain because if he were to bulk sell, the prices would come crashing down.
Second, buying buoyed by exit polls was done primarily by institutional investors of domestic and foreign pedigree. Retail investors are fringe players in comparison. Third, Modi and his ministerial colleagues can hardly be expected to play the market when far more important political issues are weighing in their minds.
Insider trading is a serious menace bedeviling markets especially the Indian bourses, but that evil is about company promoters and others privy to price sensitive information making a killing out of esoteric knowledge in their possession not known to the market. Insider trading at micro level is understandable but at the macro level is well nigh impossible. Rahul Gandhi is clearly barking up the wrong tree. Modi was only replying to a media person’s query and what he meant was his impending victory was going to send the market into a tizzy. To ask for the Joint Parliamentary Committee (JPC) to probe this alleged scam is a bad start for the Congress leader. He should choose the issues with care and not on the basis of convoluted thinking of his economic team. An overwrought mind out to corner his opponent at the earliest opportunity can cut a sorry figure. JPC comes a cropper at best of times. It will look sheepish when it probes a chimera.
S Murlidharan is a freelance columnist and writes on economics, business, legal and taxation issues
