Ketan Parekh rigged K-10 stocks and crashed the Indian market

Ketan Parekh was a Mumbai-based stockbroker and chartered accountant who had worked at Harshad Mehta's firm GrowMore Investments. From late 1998 to 2001, he orchestrated a massive stock market manipulation scheme. Parekh purchased small stakes in lesser-known, low-market-capitalization companies — informally called 'K-10 stocks' — and inflated their prices through circular trading with other traders and collusion with company promoters.

To fund the manipulation, Parekh borrowed enormous sums from Madhavpura Mercantile Co-operative Bank, where he served as a director. Zee Telefilms rose from ₹127 to ₹10,000, Visualsoft from ₹625 to ₹8,448, and Sonata Software from ₹90 to ₹2,936. After the March 2001 Union Budget, the Sensex crashed 176 points. The RBI refused to clear Parekh's pay orders, finding them suspicious. A bear cartel of opposing brokers dumped their K-10 holdings, and Parekh panic-sold his entire position at the Calcutta Stock Exchange after hours.

The resulting crash caused large-scale losses for institutional investors including insurance companies and mutual funds. Madhavpura Mercantile Co-operative Bank collapsed. Parekh was arrested in March 2001, convicted in 2008 and 2014, and banned from trading for 14 years. A 30-member Joint Parliamentary Committee investigated the scandal. In 2025, SEBI banned Parekh again for a front-running scam and impounded ₹66 crore.

He inflated K-10 stocks via circular trading, funded by the bank he directed, until the RBI refused pay orders and a crash collapsed the bank, costing a 14-year ban.

Parekh borrowed from a bank he was a director of — the ultimate conflict of interest. MMCB's lending to one stockbroker went unchecked because the borrower sat on the board.

Circular trading among associated entities created artificial volume that drew in institutional investors, who bought at inflated prices and were left holding the collapse.

The RBI and SEBI both failed to detect the pattern for years despite obvious signs: K-10 stocks rose 10x–80x while the broader market was flat.

A stockbroker who also directs a bank can borrow unlimited money to rig the market. India's second major market scandal in a decade — and the fixes left the same door open.