A lone bear, black magic and a $235 billion stock market crash

In a world where boring financial data, profit and loss statements, and complex macroeconomic events sway the everyday movement of stock prices and stock indices, one Rajkot-based stockbroker claimed last week that he spent more than Rs 8 crore to engineer a multi-day crash in the stock market with the help of esoteric black magic.

“We are responsible to a great extent for today’s fall and the fall of the past few days in the market. You won’t believe it, but we have spent over Rs 8.5 crore today in kala jadu (black magic) to create panic in the market,” Minish Patel, a SEBI-registered research analyst and owner of Patel Wealth Advisors claimed May 12 on his free Telegram channel, which has more than 1.1 million subscribers.

“Kala jadu is very costly but gives accurate and desired results,” Patel said, as though it was a matter-of-fact assertion backed by years of research and empirical evidence.

Over the course of six trading sessions (May 6-May 13), the period in which Patel claims his black magic worked, the Nifty 50 index fell over 900 points, or 5.4 percent.

In the same period, stocks listed on the National Stock Exchange of India fell more than 8 percent on average, while investors lost more than $235 billion of their notional wealth in the six-day selloff.

Patel’s claim kicked off a range of reactions on social media, drawing chuckles from some and anger from others. A research analyst with more than 27 years of experience suggested that a ritual involving the blood of a rabbit and straw dolls – rather than the global economic slowdown – triggering one of the longest declines in the ongoing bull market that started in April 2020 was bound to raise questions.

A lonely bear

Patel is no newcomer. In market circles, he is known as the mandi ka khiladi (a bear market player). His reputation precedes him, given the success of his Telegram channel, which he started in 2017.

Hailing from a middle-class background in Rajkot, Patel is said to be a self-made man who rose through the ranks, according to people who Moneycontrol spoke to. He started off with a brokerage service, providing stocks and derivatives, commodity derivatives and depository services to thousands of Gujarat-based clients. Now, he runs a financial services firm.

Patel is said to run the Telegram channel independent of his family-run stock research and advisory business. His success has attracted negative attention, mostly from Mumbai-based rivals, according to people close to him.

According to individuals aware of Patel’s business, he has made several enemies as clients of several Mumbai-based portfolio management service firms who allegedly lost money migrated to his wealth advisory service.

A spokesperson for Patel said he was unavailable for an interview when Moneycontrol called his office.

In 2020, his Telegram channel was hacked, and he was forced to create a brand new channel without losing much of his subscriber base. Those aware of the matter suggested the hack was inflicted by a bigger rival.

“He is a fine broker. The only thing I do not like is that he deletes the message once his (market) calls hit stop loss,” a subscriber of Patel’s Telegram channel told Moneycontrol on condition of anonymity. The subscriber said he has made some profit following Patel’s intraday calls on the Nifty 50 and the Nifty Bank index on the channel.

Financial astrology

Links between the financial markets and astrology go back more than a century in India, where superstition still dominates everyday life. Stories of the wealthiest stock market participants leaning on their astrologers – more than their financial advisers – to make investment decisions are ubiquitous in India.

Over the past two years, the influx of millions of new retail investors has not only created a boom in the stock market but also in the number of people taking up financial astrology to supplement their investment efforts.

“I know so many people who have taken financial astrology classes since 2020. It has seen a boom in the last two years,” Astro Sharmistha, described as a Vedic Astrologer on her LinkedIn profile, told Moneycontrol in a phone interview.

Astrologers like Sharmistha are sought after by individuals seeking advice on financial well-being, especially in matters of investments.

“If you have to earn money from the stock market, first you need to understand whether you are destined to make money or not from the stock market,” said Astro Sharmistha.

She was sceptical of Patel’s claims.

“He did ‘black magic’ on the Indian market, but has he also done black magic on NASDAQ 100, Dow Jones? The stock market is not an individual. It is huge and to change the mind of millions who are involved in the market… that person would probably have to be a god,” Sharmistha said.

Patel’s actions have resulted in complaints against him filed with the Securities and Exchange Board of India (SEBI), the capital market regulator, and the NSE, the country’s largest stock exchange.

“Patel has been inundated with calls. NSE has directly reached out to us and they say, ‘Sir, please clarify your statements, the public is not understanding,’” another person aware of the developments told Moneycontrol.

On May 13, Patel told his Telegram followers that his “well-wishers” have filed complaints with SEBI and “many SEBI officials are watching my channel continuously but they are unable to find anything problematic.”

A spokesperson for SEBI told Moneycontrol that the regulator does not comment on individual cases. The NSE was yet to respond to calls and text messages sent to their spokesperson. This story will be updated if and when NSE responds.

Defiant

Long-time subscribers of Patel’s Telegram channel don’t believe he meant his comments about using black magic to engineer a stock market crash.

“That’s just for fun. He is not serious, obviously,” the subscriber quoted earlier said.

While Patel’s claims do not violate any obvious regulations for research analysts, they could be a concern from the standpoint of SEBI’s ‘fit and proper’ requirements. The fit and proper tests include criteria on integrity, reputation and character. However, Patel exuded defiance in a rant on his Telegram channel on May 13.

“I won’t mention ‘Kaala Jaadu’ every time. One must consider it as root cause of rise or fall. Bears love us, bulls hate us. Bulls are approaching SEBI but bears are appreciating us,” Patel said.

He suggested that he was being made a scapegoat for the market fall, where bullish investors who were fully invested despite obvious signs of a reversal in trend got caught out.

“We always trade with trend. It’s not like that I am always bearish. There are many buy or long calls on channel daily. If the trend is negative, how can I flash a buy call?” Patel added.

However, the pressure may be beginning to tell. Moneycontrol understands that there are chances Patel may close his Telegram channel to avoid drawing the ire of regulators.

As for whether he actually used black magic: “Let’s keep that as a little bit of suspense,” people aware of Patel’s operations said.