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 India:
Stock Markets, Weaker than a Spider's Web
By Abdul Rasheed Qureshi
The Milli Gazette
29 May 2009
The share market rising by 2100 points or 15% and investors gaining 6.5
lakh crore rupees in just 60 minutes was touted as a return of confidence
in the market. Let us analyse whether that was really so, or was it just a
jugglery by a few manipulators?
The result of India’s general election began on 16th
May 2009. The next day was spent in grappling with the impact of the
result. On Monday, May 18, 2009 the NSE and Mumbai stock exchange saw this
unprecedented surge. Was this surge due to some fundamental change in the
working of the market? Was it because the companies had improved their
profits? Was it because just in one day the incoming government had
infused some legislation that benefitted the market? Was it because the
global economic crises had subsided? Clearly the answer to all these
questions is in the negative. In the absence of any of these factors, how
could investor confidence go up just by the result of an election and that
too, of the same political party who was already in power before elections
for five years?
Clearly, the rise and fall of share prices is not in
the control of people who can invest a paltry crore or two in the market.
It needs a bigger fish to bring a wave. It is always some Mukesh, Anil,
Ketan or Harshad who do it, and it is they who benefit from it, not the
petty investor. But, you may say, the small investor can sell his shares
during buoyancy and walk away with the profits. Sorry, gamblers lose just
because they can’t walk-off with the gains. Greed for more gains makes
them lose. Exactly same is the case with share investors.
Let’s see how this works. Much before 18th May 2009,
if just 10 big capitalists and an equal number of share brokers join hands
and decide that irrespective of what the election result is, and
irrespective of what the share prices are, they will buy shares
indiscriminately on 17th May, 2009. This is easy for them because they
have to buy the shares notionally without spending a rupee. Obviously the
so-called investor, who has petty sums to play with, will see the demand
and rush to buy shares, not knowing that it was a fabricated demand. There
goes the sensex – 2100 points higher. The same thing can be done by these
20 persons to bring down the share prices.
Can you believe that these few big players earn both
ways! When the market falls they earn because before the fall they have
offloaded (sold) their stocks and shares at the higher price. When the
market rises they earn because before the rise they have bought up stocks
and shares at the lower price. In fact every fluctuation is to their
benefit. The more the ups and downs, the better for them. If you see on
the TV screen that investors gained 6.5 lakh crore rupees, a very large
part went to the coffers of these few big players. If you are told that
investors lost a lakh crore rupees, trust that these few big players lost
nothing. In fact they will buy at low price and thereby benefit.
If on Sunday the 17th May when the prices were still
low, the Ambanis purchased shares of their own company and that of many
other companies. On the very next morning they are richer by several
hundred crores. They will sell these shares in a way that they get the
inflated price. The poor investor will not sell his shares because greed
tells him that the prices will rise further. In fact he will buy up the
shares off loaded by the capitalists. The whole game is that a few control
the market and hence gain, while the majority don’t have any control and
hence lose. Big sharks know that greed will keep bringing in newer
gamblers. In Islam, gamble is defined as an unpredictable transaction in
which many lose and few gain.
When gains from simple gambling were not enough, the
predators invented and introduced derivatives – a gamble over gamble. Now
they could make profits today for a future push or pull of the market. For
example, these predators can say for sure that during the next one year
they will push up the market thrice and pull it down thrice. So they are
bound to make profits six times. They just have to notionally buy shares
at low prices before the push-up and sell them the next day at the higher
price. Similarly, they just have to sell off their shares at high prices
before the crash and buy them the next day at rock bottom price. For them
everything is predictable because they are doing it.
“Oh you who believe! Allah says that the weakest of homes is the web of
the spider.” [Quran 29:41]
It’s a structure without foundations. Stock markets
are weaker than the spider’s web. These markets are one example of the
capitalist economy that is entirely built on faulty foundations. Greed,
lies, self interests, gambling,
usury (riba) and deceit
together make up the capitalist ideology. Despite the back-breaking
downturn, crippling almost all countries of the world, one can vouch with
certainty that nothing can change for the better till this ideology
exists. Only when Islam comes forward as a viable alternative, will this
corrupt and cruel ideology be knocked off. After their own economists have
lost faith in the principles of capitalism and after breaking their heads
to find a solution, they are now grappling with the idea of infusing fresh
blood by incorporating principles of socialism from the communist ideology
like nationalization, government intervention & regulation, forgetting for
a moment that communism is itself dead wood and antithetical to the
capitalist ideology. If you cling onto a sinking ship, you can’t expect to
be saved.
The author is a practicing advocate in the Supreme
Court of India and can be reached at rasheed1357@yahoo.co.in
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