On Thursday, Congress MP Rahul Gandhi alleged in a press conference that the sharp rise in the stock markets on June 3, a day before the Lok Sabha results, and the record fall on the day of the counting was the “biggest-ever stock market scam”.

He alleged that “fake” exit polls that predicted a landslide victory for the Modi government had been conducted to push the markets up, which crashed after it became clear that the ruling Bharatiya Janata Party would not get a clear majority on its own. Gandhi also questioned why Prime Minister Narendra Modi and Union Home Minister Amit Shah gave “specific investment advice”, in their interviews, ahead of the election results. The Congress leader called for an investigation by a Joint Parliamentary Committee.

On Friday, Scroll spoke to Praveen Chakravarty, a former investment banker who is the chairman of the Congress professionals’ wing and data analytics department, about the allegations made by his party.

What exactly is the allegation that the Congress is making about the so-called stock market scam?
The main allegation is based on evidence and data, which is on May 31, stock market activity doubled. It is extremely rare for stock market activity to double in a single day. It usually happens when there is big news.

To give you context, even when Covid-19 was declared a global pandemic, the stock market activity did not double. The last time it doubled was when on May 23, 2014, [Prime Minister] Narendra Modi was declared the winner on counting day [of Lok Sabha elections] with an absolute majority because that was the first time in three decades. It takes that kind of news, stock market activity to double.

What is the news on May 31 for the stock market activity to double? It was a day before the final phase of polling, which was known. The schedule for the election was known. So what was new? Nothing. Exit polls come out on the next day, June 1 [Saturday]. Exit polls unanimously predict a landslide victory for Modi. On June 3 [Monday], when the markets open after the weekend it moves to an all-time high based on exit polls.

So what happens to people who bought shares the previous day? The share value has gone up dramatically. Then the next day the results come and the stock market loses Rs 30 lakh crore in value. By which time these investors have made their claim and exited. Who are these investors? Why did they buy stocks one day before an exit poll? What information did they have about the exit poll that was not yet public? This is what in stock market terminology would be called an insider trading scam and in any country this would be investigated and inquired.

Who were the players involved in this alleged insider trading?
While we do not know who exactly these investors are, we know, based on data, which category of investors they are. These are foreign investors. On May 31 alone, foreign investors indulged in this buying. And foreign investors can hide from dubious [tax haven country] Mauritius entities.

In the days prior to May 31, foreign investors are not buyers, they are sellers. In the days after June 3, they are sellers. Just on that particular day [May 31] there is massive buying. And foreign investment can come from Mauritius entities that we do know very little about.

Who are these investors? What is the connection to the pollsters? On whose behalf did they invest? Whose money did they invest? How much money did they make? This is the question of retail investors.

Think of the counterfactual. If there had been no exit polls, predictions like this, the stock market would not have boomed to an all-time high on June 3, and then seen the steepest crash in history. The ride up and ride down was triggered by exit polls. Mysteriously all of them said the same thing. Mysteriously a bunch of investors buying stocks one day before [the exit polls]. One would have to be extraordinarily naive to think that this was all just a coincidence.

Who, according to you, are the end beneficiaries of this alleged scam?
That is exactly what the investigation needs to find out. See, it is actually quite easy. Because [markets regulator] SEBI [Securities and Exchanges Board of India] has all the information. They will know exactly [who the beneficiaries are]. But somebody has to tell SEBI to do an investigation. Which is why only a Joint Parliamentary Committee can [do that]. Because first of all, it involves elections and members of parliament.

How so?
Exit polls are about elections and members of parliament. So it is only appropriate that a Joint Parliamentary Committee of the members of Parliament is constituted to conduct an investigation into this exit poll scam.

The Twitter handle of the Kerala unit of Congress has posted a list of shares held by [Home Minister] Amit Shah. The post demands that the activities on stocks of these companies should be looked into. Do you think that even BJP leaders made profits out of this alleged scam?
I do not want to reduce the seriousness of this issue. This is not about somebody’s stock ownership. This is a public stock market scam.

I will give you a parallel. The chancellor of Austria was forced to resign in a very similar scandal, where he rigged polls and forced the media to carry them. This was investigated, and he was forced to resign. This is of that [level of] seriousness and importance.

I do not want to trivialise it by naming people and their stock ownership. Everybody has stock ownership. Millions of people have lost money.

The exit polls are a crucial element in the argument that you are making. Could you explain in more detail how the polls were linked to the chain of events?
I am merely pointing out facts. Was there extraordinarily suspicious, enormous stock market activity on May 31? I have data to tell you, yes. Was there any big news on May 31 to justify such activity? No. Did exit polls come out the next day? Yes. Did all exit polls say pretty much the same thing? Yes. Were all of them wrong? Yes. Did the stock markets go up one day after the exit polls? Yes. Did it crash? Yes.

A class six student would say that the enormous buying activity of May 31 is linked to exit poll information. If you tell me that there are six exit polls and all six are different then it is okay. Why did they all say exactly pretty much the same thing? And if there was an inkling of exit polls being different from each other there would not have been enormous [stock market] activity on May 31.

Who are the players involved in this alleged exit polls scam then?
Exactly, that is my question. Who are the players involved? Is it just the pollsters? Is it the media organisation? Are there party leaders that were aware of it?

Does the Congress party have any theory on how the exit polls might have come to the same conclusion?
The Congress party’s starting assumption is that the exit polls were orchestrated, coordinated by the highest levels of the BJP leadership.

BJP leader Piyush Goyal said yesterday that the foreign investors have been selling in the markets for the last two months and Indian investors have been buying. He also said that after exit polls, foreigners bought at high prices and Indian investors sold at high prices and took profit. So, no one suffered losses. How do you respond to that?
This is absolute rubbish. Anybody who understands a little bit about stock markets will say that. It does not work like that.

First of all, you have to remember that for every buyer there has to be a seller. Now, I have data that foreign investors have been net sellers for a long time but that does not mean Indian investors have been benefitting. What nonsense is this? How does a foreign investor selling benefit an Indian investor? Let us say foreign investors are not selling, will Indian investors not benefit?

I know Piyush well, he has been in the markets. He has taken full advantage of the fact that nobody understands stock markets.

Apart from the insider trading allegation, another claim has been doing the rounds is that the markets had been shorted. Is that also something that the Congress is looking into?
I have looked at it. We did not say that at the press conference yesterday because it is a bit technical. Because there are two aspects to the stock market – one is shares, the other is derivatives. When people say short, it can only be done through derivatives and derivatives is a complex instrument. Using derivatives, one can make money on the way up and on the way down.

In fact, I have the data [to show] that there has been a lot of activity volume on derivatives also. But that gets very technical, which is why I told Mr [Rahul] Gandhi not to get into that [in the press conference].

Does your demand for a Securities and Exchanges Board of India probe include derivatives also?
Absolutely. All products of the stock market. It is not just stocks. [Also] derivatives, bonds, currency, interest rates, everything.

Trinamool Congress MP Saket Gokhale has also written to the Securities and Exchanges Board of India seeking an investigation. Is there going to be a coordinated effort from the INDIA bloc towards raising this demand?
Absolutely. It has already been discussed with the INDIA bloc. See, I am not convinced that one member of Parliament writing to Securities and Exchanges Board of India will force it to do anything. I think that is why there has to be a proper committee or a body, an institutional body that will direct Securities and Exchanges Board of India to conduct an investigation. That has to be the Joint Parliamentary Committee.

And what if the Securities and Exchanges Board of India does not relent?
They do not have a choice. They have to, under a Joint Parliamentary Committee order. And then we will always go to the courts also.

Last question, if I ask you to sum up on what were the entities involved in this alleged scam, who would you hold responsible?
See, because we are calling it the exit poll scam, that means people who were involved in the exit poll, which is the pollsters, media houses, maybe more.

When you say more, who are you pointing at?
We are saying maybe investigate the role of the BJP leaders. Like Mr Gandhi pointed out yesterday in the press conference, why were all these statements about buying stocks made by the then prime minister [Modi] and the then home minister [Amit Shah]? People cannot give investment advice in public without being registered as an investment advisor.

So I would like to see Modi’s investment advisor certificate, registration certificate and Amit Shah’s investment advisor registration certificate. Please ask them to put it out in public, because they have advised Indians to go buy stocks.