The fallout from the dramatic stock market crash that occurred in the wake of the 2024 Indian general election has brought to light concerning allegations of political manipulation and regulatory failures. Opposition leader Rahul Gandhi has accused the top brass of the ruling Bharatiya Janata Party (BJP), including Prime Minister Narendra Modi and former Home Minister Amit Shah, of making “misleading predictions” about the market’s prospects, which allegedly fueled a buying frenzy among investors just prior to the announcement of election results on June 4th. This accusation has stirred significant controversy and raised questions about the ethical implications of political leaders influencing financial markets.
In the lead-up to the 2024 Lok Sabha elections, Union Home Minister Amit Shah made a bold prediction about the stock market’s prospects. In an exclusive interview with NDTV, Shah confidently claimed that the share market would “shoot up” after the BJP and its allies secured victory, leading to the formation of a stable government under Prime Minister Narendra Modi. His remarks sparked a surge in investor confidence, with the Sensex and Nifty rebounding from their recent lows in anticipation of a pro-business Modi government returning to power. The market’s reaction to Shah’s statements was immediate, with the benchmark indices gaining over 5% in the following trading sessions, reflecting the power of political rhetoric to influence investor sentiment.
However, the optimism surrounding the stock market’s prospects was short-lived. Shortly after the election results were announced on June 4th, the Indian stock market witnessed one of its worst crashes in years, with the Sensex and Nifty plummeting by over 8% in a single day. This sharp decline caught many investors off guard and wiped out billions of dollars in market capitalization, shaking the confidence of both retail and institutional investors. The sudden drop highlighted the volatility of the market and the potential consequences of speculative investments driven by political statements. Investors were left reeling as the market’s downturn erased the gains made in the previous days, underscoring the fragile nature of market confidence.
Amid the market turmoil, opposition leader Rahul Gandhi leveled a scathing accusation against the top leadership of the BJP, including PM Modi, former Home Minister Amit Shah, and former Finance Minister Nirmala Sitharaman. Gandhi claimed that these leaders had made “misleading predictions” about the stock market’s performance, leading to a massive buying of stocks on June 3rd, only to witness a massive crash the following day. The Bombay stock market scandal has sparked outrage, with the opposition Congress party describing it as the “world’s first Exit Poll Stock Market Scam.” This accusation has intensified the political rivalry and added a new dimension to the scrutiny of the ruling party’s actions.
Praveen Chakravarty, who heads the Congress’s data analytics wing, has pointed to suspicious activity in the market around the time of the exit polls, suggesting that foreign investors may have had prior information on the poll results. He pointed out that foreign investors, who have of late been net sellers in the Indian market, pumped in a lot of money on May 31 — accounting for 58 percent of all the buying of shares on that day. “It is crystal clear through data that there was suspicious and mysterious stock market activity around exit polls and election results by which a group of foreign investors gained, and millions of Indian small investors lost wealth,” Chakravarty wrote. These allegations have prompted calls for a thorough investigation into the market activities and the potential involvement of foreign entities.
However, the Congress is not alone in demanding an investigation. The Trinamool Congress, the fourth-largest party in the parliament with 29 MPs, has already written to the regulatory authority, the Securities and Exchange Board of India (SEBI), seeking a probe. Saket Gokhale, a member of the Rajya Sabha, the upper house of the Indian Parliament, asked the authorities to find out if entities making unusual profits during this period “have direct or indirect links with the BJP or with pollsters like Axis My India.” Axis My India is one of India’s leading pollsters. The demand for an investigation has gained momentum as more political figures call for accountability and transparency in the wake of the market crash.
Amidst the controversy surrounding the stock market crash, India has been grappling with a growing cybercrime epidemic that has further compounded the challenges faced by investors. Between January and April 2024, the Indian Cybercrime Coordination Centre (I4C) received a staggering 20,043 trading scams amounting to Rs 14,204.83 crore, and 62,687 investment scams totaling Rs 2,225.82 crore. The I4C has reported an average of more than 7,000 cybercrime complaints per day up to May 2024, indicating a significant surge in online fraud targeting the Indian market. The number of cybercrime complaints has been steadily rising, from 26,049 in 2019 to 15,56,215 in 2023, a 113.7% surge from 2021 to 2022 and a 60.9% increase from 2022 to 2023. Investigators have traced the majority of these cyber fraudsters to locations in Southeast Asia, highlighting the transnational nature of these criminal operations. The rise in cybercrime has added another layer of complexity to the issues facing investors and regulators.
To conclude, the allegations against Prime Minister Narendra Modi and the BJP, if proven true, would be devastating. They would shatter the ruling party’s image as a champion of the common people, revealing instead a callous disregard for the financial security of average Indian investors. The fallout from this potential scam could be a turning point in India’s politics, severely eroding public trust in the government’s integrity and competence. The implications of these accusations are far-reaching, potentially reshaping the political landscape and influencing future elections. The need for a transparent and thorough investigation has never been more critical, as the country grapples with the consequences of the stock market crash and the broader issues of cybercrime and regulatory oversight.
