Introduction to K-10 Stocks
The K-10 stocks refer to a notorious group of ten stocks that were heavily promoted and manipulated by Indian stockbroker Ketan Parekh in the late 1990s. This segment of the Indian stock market became infamous due to significant market volatility and fraudulent activities during the stock market boom of that period.
Biography and Early Career of Ketan Parekh
Ketan Parekh, a prominent figure in the Indian stock market, began his journey in the late 1980s. He started working in a securities firm run by his father, and later moved to work for a firm managed by Harshad Mehta, where he started learning and adopting various stock market manipulation techniques such as circular trading and pumping and dumping.
Selection and Manipulation of K-10 Stocks
Ketan Parekh strategically picked ten small-cap companies in booming sectors such as technology, media, and telecommunications. These companies included:
Global Tele-Systems K S Oils Satyam Computer Services Zee Telefilms Pyramid Saimira Hindustan Lever Kothari Products Hindalco Industries Sterlite Industries HDFC BankThrough various manipulative techniques, Parekh inflated the prices of these stocks, leading to significant financial losses for unsuspecting investors and contributing to the market crash in 2001.
Case Studies of Manipulated Stocks
Let's explore some of the K-10 stocks that were heavily manipulated by Ketan Parekh:
Zee Telefilms
Zee Telefilms, a pioneer in Indian satellite television, saw its stock price rise from a mere Rs. 127 to a staggering Rs. 10000. Parekh's manipulation techniques led to an artificial demand, but when the bubble burst, unsuspecting investors were left with significant losses.
Tips Films
Another target of Parekh's manipulation was Tips Films, which benefited from India's burgeoning film industry. The stock price of Tips Films skyrocketed from Rs. 18 to Rs. 700 before crashing back to reality.
Aftek Infosys
Aftek Infosys, a software services company that capitalized on the IT boom of the early 2000s, saw its stock price manipulated from Rs. 17 to an unrealistic Rs. 4000. When the bubble burst, the company's stock prices fell dramatically.
Mukta Arts
Another entertainment and media company, Mukta Arts, became a victim of Parekh's manipulation. The stock went from Rs. 5 to Rs. 200, but ultimately, the sharp drop in stock prices left investors with significant financial losses.
Conclusion
The case of Ketan Parekh's K-10 stocks serves as a stark reminder of the need for stricter regulations and ethical practices in the Indian stock market. The manipulation involved was a breach of trust and ethical standards, leading to significant financial losses for investors and regulatory scrutiny.