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Dhirubhai Ambani vs The Bear Cartel

by roshi


Dhirubhai Ambani, founder of Reliance Industries, the man who was nothing less than a hero for a common man in the 1970’s70s. Do you know how he earned that respect, well there will be many reasons but today i am going to share with you a story of Mr. Dhirubhai Ambani which i came across recently. To the people who are not familiar with some common terminologies used in the stock market, I will briefly drive you through the ones that I will be using ahead.

Terminologies:

Bear Cartel: group of people who have the ability to push down a stock price.

Brokers: people who acts as intermediaries between traders/investors and exchange

shorting/short: selling a stock beforehand and buying later

Liquidity: amount of money circulating in market

Promoter: owner of the firm

So let's start the story. Earlier the stock markets were ruled by the brokers. If a retail investor lost his money due the mistake of the broker, the retail investor was held responsible for it instead of the broker. Due to a strong unity among the brokers, ‘broker-raj’ used to exist in the stock market. Brokers treated each other as brethren and protected when needed. On the other hand, a bear cartel was already present in the market and they were the most feared group in the market. Everyone feared them and no one would ever wish to cross roads with them.

It's around 1970’s, Mr. Dhirubhai Ambani has established Reliance Industries and was planning for an IPO. Mr. Ambani’s debut in the stock market was a great success which prickled in the eyes of the bear cartel. Stock price of Reliance doubled in a short span and everyone was talking about it. Due to strong fundamentals of the company, retail investors went crazy behind Mr. Ambani. Reliance share was listed at around 30 Rs and in a span of 6 months it grabbed the height of 100 Rs. In this era the liquidity in markets was lower than that we see today, it was easy for the promoter to track who had acquired the bulk shares of his company.

The Bear Cartel who were the lions at that time saw this as an opportunity to crush Mr. Ambani. A meeting was called and a strategy was made to bring down Reliance, it was decided in the meeting to short shares of Reliance in a bulk deal. At that time the stock market had a 14 days settlement cycle, meaning if you sell a stock today you have 14 days to deliver it to the buyer. As the Bears started shorting reliance’s shares, its share price dropped from 130 to 110 Rs which is around 15%, it might have looked like a great fall but at that time it was a good figure. It was enough to induce fear of reliance in the market so that a free fall can take place.

Mr. Ambani came to know about it and was very concerned about the situation of retail investors if a free fall happens. He knew whenever such events happen it is the retail investors who loose their hard earned money and can never recover from this loss and somehow or other everyone else will come out safe with a minor bearable loss. So Mr. Ambani played a masterstroke to teach these bears a lesson. He used his network and found out who had shorted his shares and by how much quantity. He also founded who were the bulk investors holding his shares like LIC, UTI, DII, FII etc. Suddenly huge buying began to take place in Reliance, no one knew who was doing it ( the reason for this huge buying was never disclosed in the public domain until the 1990’s financial year budget when the then finance minister disclosed it in the parliament). Everyone thought that it was FII’s doing but it was not clear why and how they were doing it because at that time the FDI norms were a lot stricter than today.

An upward rally started in Reliance and it bounced back from 110 levels and crossed 150 which was a shock for everyone and from this day onwards Mr. Ambani emerged as a cult hero for the retail investors. But Mr. Ambani didn’t just stop here he had something else going through his mind. On the other side the bears went into panic, since they had shorted the 14 day limit was coming close. They were in desperate need of a seller who was willing to deliver Reliance shares so that they can deliver it on time. But Mr. Ambani had already thought of this and told everyone not to deliver them. Bears came with a solution for this and decided to hold their short position. At that time it was possible to hold a short position after 14 days settlement cycle if the sellers were willing to pay some premium to the buyers (the price will be quoted by the buyers here). Since Mr. Ambani was the one holding the strings he played his second and final masterstroke, as per his instructions the premium price was decided as 25 Rs/share. Now the sellers were squeezed in this trap set by Mr. Ambani, in all they incurred a loss of more than 5Cr. Rs.( 5Cr of 1970’s are similar to thousands of crores of today).

The battle ended on a positive note for Mr. Ambani. In Fact it was a double win for Mr. Ambani, he not only gained the trust of the Retail investors but also taught the bears to never come in his way. After this incident the bears got a good taste of defeat and learned a lesson to never target a fundamentally strong company. Even today, the bears fear to target Reliance. It can be said the Ambani’s do know how to give a befitting reply to their enemies. 


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Sun Aug 15, 2021 9:38 pm
whatchamacallit wrote a review...



Hi there roshi, I'm here for the requested review! Sorry for the delay!

So first off, as someone who doesn't know anything about the stock market, I was slightly intimidated when I started reading -- but I was relieved when I saw you included a short list of terms and definitions. That's definitely a great way of ensuring that anyone can read your essay, regardless of their knowledge of stock markets. I think in a typical essay structure, it would make more sense to include these terms at the end of the essay, or perhaps as footnotes, and just mention in the first paragraph that the reader can refer to the end of the essay for definitions. But that's not a huge deal, especially if you aren't intending for this to be a super formal essay.

One thing I noticed while reading is that in several places you refer to a generic human as "he" or as a "man". For example:

If a retail investor lost his money due the mistake of the broker, the retail investor was held responsible for it instead of the broker.

The reason I bring this up is because if you want to sound professional, and if you want your writing to be appealing to a wider audience, it's typically a good idea to refer to a person whose gender hasn't been specified using they/them/their pronouns, instead of defaulting to he/him/his. That would mean the above sentence would become "If a retail investor lost their money due to the mistake of the broker..."

It's around 1970’s, Mr. Dhirubhai Ambani has established Reliance Industries and was planning for an IPO.
I'm not entirely sure what an IPO is -- it wouldn't hurt to include that in your list of definitions!

Mr. Ambani came to know about it and was very concerned about the situation of retail investors if a free fall happens.
There are several places where you switch tenses, like here -- "came to know" is in the past tense (as is the majority of your essay), while "if a free fall happens" is in the present tense. I would just suggest changing the last bit to "if a free fall were to happen", to keep it consistent with the rest that's written in the past tense. Not a big thing, just something to look out for!

The structure of an essay is usually intro-body paragraphs-conclusion, and I thought you did a great job of following that structure! I especially thought the closing paragraph wrapped up the essay really well and acted as an easy-to-read summary. I also enjoyed that you put all of the body paragraphs in chronological order, as that made it read a bit like a story, and made it overall quite easy to follow. You also kept your paragraphs to nice, manageable sizes, so that there were no overwhelming chunks of text.

The only significant part of an essay structure that's missing would be a bibliography/listing sources; if you were to publish this anywhere, you'd want to make sure you cited where you found all your information about Dhirubhai Ambani and Reliance Industries.

I definitely learned quite a bit while reading your essay! There are a couple of ways that you could work to polish it up, but altogether I think it's a solid start and the information was laid out well. I hope this review proves helpful for you, and again, thank you for requesting one!

all the best,
-whatcha




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Fri Aug 06, 2021 4:44 pm
RandomTalks wrote a review...



Hey Roshi!

RandomTalks here to leave a review and to get your work out of the green room!

To be honest, I have never been very interested in the stock market or in the life of the Ambani's. So, I really did not know what to expect when I started reading this article. However, you included so much information in a manner so appealing, that it wasn't boring to read at all. I liked how you stuck to your information and still managed to include a freshness in the article that was neither stiff nor very formal. I also liked the fact that you explained all the terminologies, so that it is easier for your readers to understand what this is about. You delivered this article as if you were telling a story, and I think that makes the text a lot more easier and appealing to read.

I did notice some minor problems, so I am going to get into that for you!

"Dhirubhai Ambani, founder of Reliance Industries, the man who was nothing less than a hero for a common man in the 1970’s70s. Do you know how he earned that respect, well there will be many reasons but today i am going to share with you a story of Mr. Dhirubhai Ambani which i came across recently. "

Your introduction was very informative and it gives us an idea of what exactly this article is about. However, there are certain issues with this. Firstly, your opening sentence is not really a full sentence. It feels incomplete somehow. So, I would suggest writing it like this: 'Dhirubhai Ambani, founder of Reliance Industries, 'was' the man who was nothing less than a hero for a common man in the 1970’s70s.'
The other part of this paragraph is a huge run on sentence. This is a very common mistake among writers. I would suggest putting a question mark after 'respect' and breaking it up into two different sentences from that point. Also, 'i' should be in capital, so I am guessing that is a typo?

"If a retail investor lost his money due the mistake of the broker, the retail investor was held responsible for it instead of the broker."
This sentence has a word missing. There should be 'to' after 'due', so that the sentence reads: "If a retail investor lost his money due to the mistake of...."

"Reliance share was listed at around 30 Rs and in a span of 6 months it grabbed the height of 100 Rs."
I guess when we read money, we say 'thirty rupees', but, I personally have never seen Indian money represented like that. You should simply write it as Rs.30 and Rs.100.

Run on sentences are a continuing problem for you. There are several run-on sentences throughout the article. I am going to point some of them out for you, and so that you understand what I am trying to say.

As the Bears started shorting reliance’s shares, its share price dropped from 130 to 110 Rs which is around 15%, it might have looked like a great fall but at that time it was a good figure.


Break the sentence after '15%'.

A meeting was called and a strategy was made to bring down Reliance, it was decided in the meeting to short shares of Reliance in a bulk deal.


Break the sentence after 'Reliance'. I am hoping you get the idea.

Other than this, there were a few other problems with punctuation, but those can be overlooked. I hope I helped somewhat with this review.

That's all.

Keep writing and I hope you have a great day!




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Thu Aug 05, 2021 3:49 pm
Plume wrote a review...



Hey there! Plume here, with a review! I noticed your work has been in the green room for a bit, so I thought I'd bump it out!

This was a very interesting piece! I had never heard of Dhirubhai Ambani before, but he sounds like a very interesting gentleman! I enjoyed reading about his experiences in this small essay of yours. It was very informational while still being entertaining. I like the way you told it like it was a story rather than a big chunk of information. That made it very clear and easy to follow.

One thing I liked about this was how you took time to explain certain terms. The stock market isn't necessarily the most accessible topic, but your piece made it a lot easier to understand. It was interesting to read about Mr. Ambani and how he utilized the stock market to further grow his company. The only thing I think might be useful to address were all the acronyms like "IPO" and "LIC, UTI, DII, FII." I assume they're the names of stocks...? But it might be good just to say what they are so the reader can better understand what you're talking about.

Specifics

Do you know how he earned that respect, well there will be many reasons but today i am going to share with you a story of Mr. Dhirubhai Ambani which i came across recently.


Couple things: this is a bit of a run-on sentence with a lot going on in it. I think that it might be better if you separated it in a few places. After "respect" there should be a question mark, since you're asking a question. The second part of the sentence was a bit more conversational, which would be out of place in a more serious essay, but I think it actually works with the tone you're trying for. However, I do think you could throw some commas in wherever there's a natural pause, because it's a bit hard to read right now.

A meeting was called and a strategy was made to bring down Reliance, it was decided in the meeting to short shares of Reliance in a bulk deal.


This sentence is in passive voice. Generally, when writing an essay, you should try to use active voice as much as possible. In active voice, this sentence would be something like "They called a meeting and made a strategy to bring down Reliance." On top of that, this sentence is technically a comma splice. The part after the comma should really be its own sentence. It's a common mistake, though, and it wasn't the only place I noticed it within your draft. I think it would be beneficial for you to go through and read it or to put it through some grammar application like Grammarly just to catch the mistakes.

Overall: nice work! I think this was a very nicely formatted essay and succeeded at being both entertaining and informational. Great job, and I hope to read more of your work sometime!





I want to do with you what spring does with the cherry trees.
— Pablo Neruda