Book review #Eight of 2021: Bulls, Bears and Other Beasts

A Story of Indian stock market by Santosh Nair

I had an induction course at my MBA Campus and a 2-day induction session at my first job at SBI capital markets. The inductions still left me unprepared for the real stock markets.  I suggest this book as an induction material for all present and prospective participants of the Indian stock market as it so aptly captures all the major events of the last 3 decades in the stock market and more so from a personal angle making it a thrilling read. SCAM 1992 series was an awesome series on Harshad Mehta; though I believe the series since it was being told with Harshad as the protagonist tended to be not critical enough of his misdeeds. This book is an apt read after the series has whet your appetite for the stories of market manipulation. 

My Father has been a trader in the stock markets for 30 years, so I have been used to hearing names like Himachal futuristic, DSQ software, and ZEE telefilms very early in my life on a regular basis.  Also, at least 2 of my close family members lost their life savings in the markets triggered by the KP scam. So, the books bring out a lot of memories. My father has been telling me how the markets worked than especially Badla, Kerb trading, and shouting in the pits.  Every trader has their own exploits and my father still remembers vividly how he was able to do arbitrage in a few stocks because of the difference in pricing in Kolkata vs Vizag.

The book mentions few events – where I had a ring side view as well. 

Run on ICICI Bank:  ICICI securities (ISEC) was hosting a conference in Singapore with Chanda Kochhar meeting FIIs and explaining to them why ICICI bank is not affected by sub-prime credit.  Parallelly there was news on business channels that ICICI UK had some exposure triggering a run on the bank.  I was at the conference and the only talking matter was ICICI Bank.  I had friends calling me to withdraw all my money from ICICI bank as both my savings and Job was at risk.   Thankfully, I ignored them for I was clear I did not want the rumors to be a self-fulfilling prophecy and also “ICICI bank is too big to fail”.

P-notes and Chidambaram: ISEC was hosting a US conference and the biggest selling point of the conference was that Chidambaram, the FM will also be speaking at the conference. Immediately before the conference, there was an uncertainty on the P-notes, and FIIs were worried about them.  We had a packed house in New York for the FM session and it is at the ISEC conference Chidamabaram clarified the govt stance on P-notes (not to ban), which led to a rally in the market.

ZEE entertainment and pledges:  ZEE entertainment has been a very active stock and almost all fund managers had very strong opinions about the company and promoters. Old-timers would ridicule it as a Ketan Parekh stock and Bulls would argue it’s a new company under Puneet Goenka. Given the huge amount of interest and history and web of shareholding, a large part of my career was dedicated to researching ZEE. Despite that, I was surprised when I realized how ZEE had managed to bypass reporting of its actually pledging as that done offshore was not reported.

For me, while the book talks a lot about market operators and underlying scams, it’s actually a celebration of how far Indian markets have come in improving transparency and fairness.  I think market participants don’t give enough credit to SEBI for what it has achieved.  Today most retail investors are guaranteed a fair chance in IPOs.  Grey market trading is still very prevalent, but I think SEBI has limited ability to correct that unless it makes IPO grey market as a segment on the bourses. (I own IPR for this idea – please give me due credit for this).

The book also puts in perspective why the Indian market is so glued to every union budget. Despite the reducing impact on the budget in the markets, the old-timers know that the budget was a key event earlier. Also, the role of market operators will continue and this is why my father still believes all stock movements are because of operators.

Quotes from the Book:

Experience tells me that it is a good sign to have some disbelievers.

When stocks become overvalued people try to justify it rather than admit they are expensive.

It is like all milk is adulterated, only the proportion of water varies.

Fun facts from the book:

DSP MF initial full form is DS Purbhoodas.

Harshad Mehta celebrated his triumph over bear cartel by feeding peanuts to a bear in the city zoo and getting that recorded. 

Newspapers carried IPO grey market rates along with regular stock quotations in the 1990s.

On Feb 11, 1986, 110 issues were launched on a single day.

Dot-com boom: Even news of an old economy company launching its website was sufficient to get investors excited.  (Later in 2008, markets got excited about GMR announcing an Ice cream option at its airport.


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