Origin of Manu Manek
Manu Manek was born between 1948-1952 in Kolkata. After finishing his graduation, he worked as a stockbroker in the stock market. His experience and training as a stockbroker gained him excellent knowledge of the market; therefore, later, he started investing money by analysing the market and earning massive profits. Many years of observing and playing on the sidelines made him a well known and exponentially growing figure in the Indian stock market/Dalal Street. He was believed to have the art of reading the market trends naturally. In the 1980s, the Cobra became an influential personality and had a lot of money.
Before Harshad Mehta came into power, the market was under complete control of Manu Manek, unofficially known as the "King of BSE (Bombay Stock Exchange)". He was said to have a strong rapport with the officials in BSE, as it was observed that whenever he was in a tight spot during a trade, the settlements were delayed to give him time. It is said that nothing happened in the market without his knowledge; companies changed their board and announced their dividends with his permission in the '70s and '80s as he was too strong to rig any stock prices. Even the best companies would not dare to stand against him.
Manu Manek, a.k.a. "Black Cobra of Dalal Street", was one of the bear operators during the '70s and '80s. Operators are market players who form a cartel and manipulate market prices with a massive amount of money for personal gains. Manu Manek was also pictured in one of the latest series on SONYLiv, "Scam 1992: The Harshad Mehta", as Manu Kundra.
Bearish Strategy Used by Manu Manek
The Strategy used by Manu Bhai was called the Bearish move. To understand this, one needs to understand the bull and bear trends and their strategies. When the market follows an upward trend, it is called the bullish trend, whereas, in the downtrend, the sentiments of people are pessimistic and called bearish trends. The most commonly used trading strategy where a trader buys stocks at a lower price, expects them to move upwards in a bullish trend, sell them at a high price, and book the profit. When there was a bearish trend (a sentiment where investors think that prices are inflated and companies are overvalued), a trader would anticipate that the price for any scrip would go down, they would short-sell. In recent times, the general way to short sell is by placing sell orders of a scrip but by the end of the trading day, and a person has to buy back stocks.
In the '70s and '80s, when the stock market rules were not strict enough, big players like Manu Manek and Harshad Mehta would benefit from loophole mining. Manu Manek would ask the stockbroker to lend the shares and sold many of them to create the selling pressure for a particular scrip, which led to a decrease in the stock price as other traders would also sell after speculating the downward moment. Then the Cobra would buy back these stocks at a low price and thus book his profit. This would harm the retail investors who trade for short term gains, but what about the long term investors? To know more about this, click here.
Manu Manek Counters With Dirubhai Ambani
Many industrialists feared Manu Manek, even Tata's and Birla's feared him. On the other hand, Reliance under Dhirubhai Ambani went public in 1977 and was a successful company with sound fundamentals. It was the largest private company in the early '80s, and Dhirubhai used to make decisions in the best interest of their stakeholders. He believed that if he had good investors now, it would be easier to get more for the expansion.
As per hearsay, Manu Manek set an eye on Reliance and started short selling the Reliance share and the share price of Reliance went down. Instead of approaching Manu, Dhirubhai Ambani asked his lieutenant Anand Jain (a classmate of Mukesh Ambani) to fight on Reliance's bear cartel attack. Thus Anand Jain and his associates bought stocks that Manu Manek sold to maintain the price. Manu and the cartel kept shorting more shares, and Anand continued to buy them. The problem arose for Manu because he used to borrow these shares and sell them, planned to buy back once the prices were low. In this case, because Anand bought so many stocks, there was not much supply in the market, and the prices shot up; thus, many of the bear cartel traders booked losses. Therefore, Manu Manek went for the settlement and lost the war.
Bull and Bear Locks Horn
Manu Manek and his bear cartel made much money and ruled the market until Harshad Mehta, a.k.a. the big bull, came into the picture. Harshad Mehta managed to convince the banks to write his name on the cheques drawn. Harshad Mehta used to be the broker for RF deals which involved just 2 banks, but he brought many banks into the chain. He would then use the money deposited in his account to pump up the stock markets and told people that it was because of the positive sentiments and the companies are currently undervalued. Thi is how he managed to take advantage of the loopholes in the system.
With the opposite Strategy, Manu Manek crossed paths with Harshad Mehta several times, starting from Apollo Tyres. From 1985 till 1992, the bear cartel booked huge losses as Harshad kept the demand up with his money from banks and the bear cartel had no idea about how the money was coming into the market. This continued until Harshad Mehta's scam was uncovered, and he was arrested. Radhakrishnan Damani, the owner of the D-Mart, made a statement in an interview that if Harshad Bhai had kept that position for a week longer, he would have had to start begging on the streets. After this incident, Manu Manek and some of the prominent members of the bear cartel eventually stepped away from trading and started value investing.
The Bear Cartel
Many characters from the bear cartel picturised in the famous web series "Scam 1992", where Manu Manek was the chief with 3 others. These other 3 are famously known as the triple R's in the real world: Raju, Radhakrishnan Damani (RKD) and Rakesh Jhunjhunwala, who later came to be known as "Warren Buffett of India". RKD is the founder of D-Mart and the 8th richest Indian with a net worth of $14.5 billion; even Rakesh Jhunjhunwala has an estimated net worth of $4.5 billion.
Manu Manek became successful because of his skills at reading the market trends and the friends and pupils he made along his journey. The recently acclaimed big players of the market are either his pupils or close friends of Manu Manek. Some of these people you can try to find in the series" Scam 1992" are AS Thiyagarajan, Ajay Kayan and Nimesh Shah.