Hackneyed protestsHarshad Mehta never gives up. After being caught manipulating prices all over again, he churned out the same tired and hackneyed protest about a powerful bear cartel destroying stock values. In Harshad's book, it is perfectly all right to manipulate prices so long as they move up - but when the rigging operation is destroyed by heavy bear hammering, he begins to cry foul.In fact, there is no bear cartel in the market today. There are only a set of big time operators who are bullish when the prices are rising and turn quickly bearish at the first sign that the rally is beginning to lose steam or that certain scrips are being manipulated.The fact that the margin system is skewed in favour of bears gives their short selling operation enormous muscle. But then, it must be remembered, that Harshad Mehta also gave himself an unfair advantage in 1992 as well as in 1998. He connived with company managements to ensure a steady supply of shares and funds.NakedProtestHarshad Mehta may protest about bear hammering, but the Bombay Stock Exchange (BSE) directors are not quite happy to take away the trading advantage that they traditionally enjoy (they can make naked short sales without having to borrow stock, they pay lower margins when purchases are netted against sales and also earn badla from the bulls). At a SEBI committee meeting last week which discussed the issue, the BSE president and a broker director strongly, but unconvincingly denied that bears had an unfair advantage - implying that the exchange management continues to protect the bears.The interchange, witnessed by the SEBI Chairman seems to have convinced him about the speciousness of the pro-bear arguments. It is now expected that the concept of stock lending which has been quietly buried for over a year may be revived again in order to force bears to borrow shares before making short sales.Crossed ConnectionsThe investigation of Dawood associate Romesh Sharma is leading a trailto a big time broker on the Mumbai exchange. The CBI has unearthed audio evidence which indicates that the broker and his partner had sought Sharma's help in getting several crores of rupees out of the Reliance group.The broker, had until recently seemed coated with Teflon - neither his notorious past, nor his involvement in price manipulation shook him. He called the shots at the exchange comfortable in the knowledge of the regulators' benevolence. The broker's shenanigans during the June payment crises finally scratched the non-stick surface and forced the regulator to seek his resignation. Will the Teflon withstand the Sharma connection, just as it had the scam connections in 1992?Steely RevengeHaving been at the receiving end of media flak, private steel producers are hitting back in several directions. For starters they have strenuously objected to SAIL and TISCO getting cheap funds from the Steel Development Fund and skewing the playing field. Next, they are working overtime to counterthe view that they will be the big non-performing assets in the books of financial institutions. Their finding: that these institutions have a bigger exposure to the largest private sector company-Reliance-than to all private steel producers combined and that the scrip has depreciated enormously too. An institutional source counters, unlike the steel companies Reliance is not covered with red ink.
