Rakesh Jhunjhunwala” Takes Punters For A Ride In Surana Solar Scam

On Monday, 8th June 2015, the radar flashed the red alert that “Rakesh Jhunjhunwala” had bought and sold 2,50,000 shares of a little known company called Surana Solar Ltd.

However, as the trade was squared off on the same day, nobody paid much attention thinking that it was a quirky time-pass transaction of the type that the Badshah is known to occasionally indulge in.

On Tuesday, 9th June 2015, the radar again flashed the red alert that “Rakesh Jhunjhunwala” had bought another lot of 2,56,500 shares of Surana Solar at Rs. 53.74 each. However, this time he was reported to have taken delivery of the shares.

Nobody bothered to check whether the “Rakesh Jhunjhunwala” who bought the Surana Solar stock is the same Rakesh Jhunjhunwala who is revered as the Badshah of Dalal Street or he is just a namesake. All the major journals, including the ET, Business Standard, Mint, NDTV etc, reported the purchase as being that of the Badshah’s.

Today morning, the punters were understandably excited and eager to have a go at the Surana Solar stock. They lined up in large numbers at the counter and each was desperate to grab as much of the stock as he could.

The total volumes traded today in this little-known counter was 5,824,896 shares on the NSE and 1,756,375 shares on the BSE. You can judge the magnitude of the volume when you compare it with the 30-day average volume of the stock, which is a mere 75,000 shares.

Not surprisingly, the hectic buying action sent the stock surging to an all-time high of Rs. 63, up nearly 19% from the opening price.

By afternoon, CNBC’s Varinder Bansal broke the news that the “Rakesh Jhunjhunwala” who bought the stock is not the Badshah of Dalal Street but a namesake based in Kolkata.

Within seconds, the stock price slumped like a ton of bricks, leaving the punters dazed and confused in its wake.

At the end of the day, the stock closed at Rs. 44.75, down a whopping 40% from the peak of Rs. 63 and down 15.65% from yesterday’s closing.

Varinder Bansal speculated in his report that the entire episode appears to be a carefully orchestrated ‘pump-n-dump’ operation. Apparently, somebody had planned the entire episode and was lying in wait for the stock price to surge so that he could dump a large quantity on the hapless punters.

When I last checked, the punters were licking their wounds and looking very downcast. Hopefully they would have learnt a lesson from today’s episode that you must always look before you leap!