{"id":40997,"date":"2026-05-29T17:00:07","date_gmt":"2026-05-29T11:30:07","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=40997"},"modified":"2026-05-29T17:01:18","modified_gmt":"2026-05-29T11:31:18","slug":"fraud-is-a-family-business","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/fraud-is-a-family-business\/","title":{"rendered":"Fraud Is a Family Business"},"content":{"rendered":"

There was a time when stock market wisdom came wrapped in balance sheets, broker notes and uncomfortable conversations with people who used phrases like \u201cdiscounted cash flow\u201d without smiling.<\/span><\/p>\n

Now, it can arrive as a tweet, a Telegram forward, a WhatsApp screenshot, or a confident \u201cno brainer\u201d from an account with a profile picture, a disclaimer, and enough followers to move the mood in a thinly traded stock.<\/span><\/p>\n

A recent interim order by capital markets regulator SEBI shows exactly how the market\u2019s oldest trick has found a very modern wardrobe.\u00a0<\/span><\/p>\n

The regulator has alleged that a group of people built positions in SME stocks, promoted those stocks on X (formerly Twitter), WhatsApp and Telegram, and then sold into the enthusiasm generated by those social media posts. In simpler language, it was a classic pump-and-dump playbook.<\/span><\/p>\n

The order names Hemant Gupta, Rohan Gupta, Aniket Gupta, Sharon Gupta, Leana Gupta, Rajani Gupta and Purvangi Gupta as noticees. SEBI has broadly described Hemant, Rohan and Aniket as operators as well as beneficiaries, while the others were described as profit makers or beneficiaries. What\u2019s interesting also is that Hemant is the husband of Sharon and ex-husband of Rajani. Rohan and Leana are children of Hemant and Sharon while Aniket and Purvangi are children of Hemant and Rajani. So, all in all, it was a family enterprise!<\/span><\/p>\n

What makes the order striking is not merely the alleged profit, but the machinery. According to SEBI, the accounts included @WealthSolitaire and @desiwallstreet on X. The first had about 13,600 followers and the second about 40,500 followers around January 2026. That may not sound like celebrity scale, but in SME counters, where liquidity is often thin and investor appetite can be swayed by a persuasive story, even a modest crowd can become a market force. Add WhatsApp groups and Telegram channels, some with thousands of members, and the humble \u201cforwarded many times\u201d message begins to look less like chatter and more like market infrastructure.<\/span><\/p>\n

The regulator\u2019s description of the messaging is almost cinematic. There were allegedly phrases such as \u201cabsolute no brainer\u201d, claims about future revenue and market capitalisation, and talk of microcaps becoming large caps. The language was not merely informative. It was designed to excite, reassure and recruit. Every bull market has its poetry. Unfortunately, some of it is written for the exit door.<\/span><\/p>\n

The order also points to an important detail. SEBI says the noticees appeared aware of regulatory risk. Chats cited in the order suggest discussions on avoiding explicit buy or sell calls, staying away from aggressive words, and using \u201cfundamental reports\u201d as a safer wrapper. This is the modern compliance fig leaf. Say \u201cnot a recommendation\u201d loudly enough, and perhaps the market gods will look away. SEBI, clearly, did not.<\/span><\/p>\n

The numbers are equally telling. SEBI says the combined gross trade value of the noticees rose from Rs 548.62 crore in the pre-examination period to Rs 1,023.40 crore during the examination period. Squared-off profit rose from Rs 17.06 crore to Rs 58.40 crore. In the 82 scrips examined, SEBI has calculated prima facie wrongful gains of Rs 20.25 crore.\u00a0<\/span><\/p>\n

The larger issue is not just one family, one set of accounts, or one set of SME stocks. It is the growing collision between financial influencers, or finfluencers, and market integrity. Social media has democratised market commentary, which is good. It has also made it easier to wrap self-interest in the language of education, conviction and community, which is not so good. The retail investors are told they are part of a wealth creation journey. Sometimes, they are merely liquidity.<\/span><\/p>\n

This matters especially in the SME segment. Many SME stocks have low public float, limited analyst coverage and uneven information flow. A strong social media push can create the illusion of discovery. The investors think they are early. They may actually be late, entering just as the promoter of the idea is heading for the exit.<\/span><\/p>\n

SEBI\u2019s order should make influencers, finfluencers and self-styled market educators pause. Disclaimers are not magic shields. Calling something \u201ceducational\u201d does not cleanse trading intent. Posting a chart after buying and before selling is not a philosophy. It is conduct, and conduct leaves a trail.<\/span><\/p>\n

For investors, the lesson is even simpler. When a stranger on the internet says a stock is a no brainer, the first brain you should use is your own. Ask who owned it before the post, who is selling after it, and why the opportunity has arrived in your WhatsApp group before it arrived in institutional research.<\/span><\/p>\n

In markets, blind faith can be expensive. Verification is much cheaper.<\/span><\/p>\n

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\"SIP_Kuvera\"<\/b><\/strong><\/span><\/p>\n

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Grounded<\/b><\/h3>\n

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Moving on from the stock market to the aviation market, where tension is now becoming increasingly visible.<\/span><\/p>\n

IndiGo and Air India have both reduced planned domestic operations for June and July. IndiGo is estimated to have cut 7-10% of planned domestic flights for the period, while Air India\u2019s reductions are significantly steeper at around 22%.<\/span><\/p>\n

The two airlines account for nearly 90% of India\u2019s domestic passenger market, so the reductions will push fares higher.<\/span><\/p>\n

Now, airlines rarely cut flights when planes are still full and fares remain high\u2014unless something underneath the economics is beginning to tighten. So, what explains the decision of the airlines?<\/span><\/p>\n

At first glance, the explanation appears straightforward. The conflict in West Asia has pushed up jet fuel prices, increasing pressure on airline operating costs at a time when profitability already remains uneven. Aviation turbine fuel can account for as much as 40% of airline expenses, leaving carriers unusually exposed when crude prices rise sharply. Air India itself cited the \u201csustained impact of high fuel prices\u201d while announcing \u201ctemporary rationalisation\u201d across some local routes.\u00a0<\/span><\/p>\n

But the current pullback does not appear to be driven by fuel prices alone.<\/span><\/p>\n

Airlines typically trim some domestic capacity once the stronger summer travel season gives way to the slower monsoon quarter. What makes the current moment notable is that these routine seasonal adjustments are arriving alongside a much harsher operating environment. Fuel costs have risen, the dollar remains strong, and geopolitical disruptions are interfering with network planning. That combination tends to change airline behaviour quickly.<\/span><\/p>\n

An airline cannot remove fuel costs from its balance sheet. What it can do is quietly redeploy aircraft away from routes where margins are beginning to thin. Morning frequencies disappear. Marginal sectors lose an extra daily service. Capacity growth slows. Those adjustments are now beginning to show up in schedules.<\/span><\/p>\n

That matters because Indian aviation spent much of the past two years operating in an environment where growth often appeared strong enough to absorb rising costs. Passenger traffic rebounded sharply after the pandemic, airlines placed record aircraft orders and travel demand remained resilient despite elevated fares.<\/span><\/p>\n

The long-term growth story has not disappeared. India is still expected to remain one of the world\u2019s fastest-growing aviation markets over the coming decade. But growth does not eliminate vulnerability to external shocks.<\/span><\/p>\n

Air India\u2019s position illustrates that clearly. The airline is attempting a large-scale transformation under the Tata Group while managing elevated fuel costs, Pakistan\u2019s airspace restrictions, a strong US dollar and operational restructuring. Earlier cuts to international routes had already created room for foreign airlines to increase capacity into India.<\/span><\/p>\n

Even IndiGo, which remains financially stronger than most domestic competitors, appears increasingly focused on protecting margins and maintaining operational flexibility rather than expanding capacity aggressively across every route.<\/span><\/p>\n

That shift is subtle, but important. For passengers, the immediate impact may simply mean tighter seat availability and persistently elevated fares on some routes during the travel season. For the industry, however, the larger signal is that airlines are beginning to behave more cautiously underneath the headline growth numbers. And in aviation, that caution often appears well before broader stress becomes visible publicly.\u00a0<\/span><\/p>\n

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Delivery Failed<\/b><\/h3>\n

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Coming back to the ground, there were only a handful of major corporate developments this week as companies wrap up the earnings season. One of those developments involved Swiggy, which went public barely six months ago.<\/span><\/p>\n

The company recently tried to amend its Articles of Association to move towards being classified as an Indian Owned and Controlled Company (IOCC). This is not a minor change; it\u2019s serious business. This is where ownership, control, board rights, founder influence and shareholder trust all sit at the same table and pretend the bill will be easy to split.<\/span><\/p>\n

Shareholders were not entirely convinced. The proposal received a little over 72% support, missing the 75% threshold required by law to pass a special resolution. Clearly, this was one delivery Swiggy\u2019s shareholders could not digest!<\/span><\/p>\n

The immediate consequence is clear. The AoA amendment did not go through. The related plan to appoint CFO Rahul Bothra and co-founder Phani Kishan Addepalli to the board through that route also did not take effect. Separately, shareholders approved the appointment of Renan De Castro Alves Pinto as a non-executive, non-independent nominee director with overwhelming support. So, this was not a shareholder revolt against everything Swiggy proposed. It was more selective. Investors were not refusing dessert. They were asking what exactly had been added to the recipe.<\/span><\/p>\n

Swiggy has since clarified that the proposed amendments were not meant to give founders additional powers, veto rights, permanent board seats, quorum control, committee dominance, or majority board appointment rights. It says this was about continuity of domestic management oversight in a listed company without an identifiable promoter group. That is a reasonable explanation\u2014but one the shareholders like to hear before the vote, not after.<\/span><\/p>\n

The episode is important because it goes beyond Swiggy. India\u2019s new-age listed companies are still learning the habits of public-market life. As private companies, they often grew inside a world of negotiated rights, founder protections, and board arrangements understood by a limited circle. Once listed, that world changes. The cap table becomes more public. The voting base becomes wider. The explanation has to travel beyond lawyers, founders and early investors. Public shareholders do not just ask whether something is legally permissible. They ask whether it feels fair.<\/span><\/p>\n

That is where Swiggy appears to have run into resistance. Investors may not have objected to Indian ownership and control as an aim. The discomfort seems to have been around the route chosen to get there.\u00a0<\/span><\/p>\n

For founders, this is a delicate moment. They built the company, took the risks, survived the chaos, hired the teams, convinced investors, and carried the brand through its most vulnerable years. It is natural for them to argue that long-term strategy needs founder or senior-management continuity. But public markets are suspicious of rights that look like influence without matching economic ownership. In Swiggy\u2019s case, for instance, the founders own less than 6% stake while mutual funds hold about 20% and its early venture capital investors own over 37%.<\/span><\/p>\n

This is not to say Swiggy\u2019s proposal was bad. The company says it was not a power grab. There may be sound regulatory and strategic reasons for trying again with better communication and cleaner drafting. But the failed vote shows that governance cannot be delivered like a midnight snack. It needs disclosure, context, timing and trust.<\/span><\/p>\n

The lesson for Swiggy is straightforward. If it wants IOCC status, it must explain why shareholders should care, what rights are being changed, who benefits, what safeguards exist, and why the structure is necessary. The lesson for investors is equally clear. In listed new-age companies, the real story is no longer just growth, losses, cash burn, or food delivery margins. It is also control, given that founders don\u2019t typically own a large stake.\u00a0<\/span><\/p>\n

The irony is delicious. Swiggy built a consumer empire by reducing friction. One tap, quick delivery, instant gratification. But corporate governance is not quick commerce. You cannot nudge public market shareholders into changing the rulebook with the same ease with which you allow customers to add extra chutney.<\/span><\/p>\n

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Funding the City<\/b><\/h3>\n

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Let\u2019s now switch from quick commerce to issues of everyday importance that rarely enter market conversations with as much excitement\u2014such as roads, sewage systems or drainage projects. Yet one of the more interesting developments this week came from precisely that corner of the economy.<\/span><\/p>\n

The Brihanmumbai Municipal Corporation is planning a Rs 9,500 crore municipal bond issue in what would be its debut in debt markets, according to media reports. The proposed fundraising is expected to support infrastructure projects across the city, including roads, sewage systems and other civic works.<\/span><\/p>\n

The proposal points towards a larger question India\u2019s financial system may increasingly have to confront over the next decade: who pays for urban expansion when cities begin growing faster than traditional financing channels can support?<\/span><\/p>\n

That pressure is becoming harder to ignore. India\u2019s cities are expanding rapidly, while infrastructure projects themselves are becoming more expensive, more complex and longer in duration. At the same time, traditional sources of funding are already balancing competing demands. Banks continue carrying large infrastructure exposure, while state and central governments are stretching spending across welfare, healthcare, defence and capital expenditure priorities.<\/span><\/p>\n

In that environment, municipal borrowing begins to look less like an optional experiment and more like a financing model that may gradually become difficult to avoid.<\/span><\/p>\n

Municipal bonds remain relatively uncommon in India despite years of discussion around deepening local debt markets. Cities such as Pune and Ahmedabad have previously raised money through bond issuances, but the market itself remains small compared to the scale of India\u2019s urban infrastructure requirements.<\/span><\/p>\n

Debt markets offer cities another route to capital. They also expose civic bodies to a level of scrutiny that traditional government funding does not always impose. Investors buying municipal debt will eventually care about issues such as repayment credibility, accounting transparency, project execution and the financial health of local institutions. Borrowing costs themselves become signals about how markets assess the quality of governance.<\/span><\/p>\n

That may ultimately become the more important shift behind BMC\u2019s proposed fundraising plan.<\/span><\/p>\n

For years, India\u2019s capital markets largely focused on companies raising money for growth. Municipal borrowing introduces a different relationship between markets and development.\u00a0<\/span><\/p>\n

Investors are no longer only funding businesses or consumption trends. They are indirectly financing the physical systems that allow cities themselves to function.<\/span><\/p>\n

The timing is notable as well. Regulators have recently signalled a broader push towards deepening debt markets and expanding participation in fixed-income financing. BMC\u2019s proposed issuance arrives at a moment when policymakers increasingly appear aware that India\u2019s long-term growth ambitions will require financing structures beyond traditional bank lending alone.<\/span><\/p>\n

Whether India\u2019s municipal bond market can scale meaningfully remains uncertain. Investors are still likely to approach civic borrowing cautiously, particularly in a country where governance quality and municipal finances vary sharply across cities. A successful bond market ultimately depends not just on demand for infrastructure, but on confidence that projects can be executed transparently and repayment obligations managed responsibly over long periods.<\/span><\/p>\n

Even so, the direction itself is significant. Markets often discuss growth in terms of valuations, earnings and investment cycles. Municipal bonds shift the conversation towards something more tangible: how roads are built, how water systems are financed and how rapidly expanding cities pay for infrastructure they increasingly cannot function without.<\/span><\/p>\n

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\"FD_Kuvera\"<\/p>\n

<\/h3>\n

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Market wrap<\/b><\/h3>\n

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India\u2019s stock market benchmarks ended lower this week, as investors remained cautious about the fragile peace in the Middle East. The Nifty 50 dropped 0.7% while the BSE Sensex lost 0.8%. This takes their losses in May to 1.9% and 2.8%, respectively. The indexes had plunged about 11% in March before rebounding 7-8% in April.<\/span><\/p>\n

The weekly losses were due mainly to a sharp drop in the last half an hour\u2019s trade on Friday after index provider MSCI\u2019s May index changes took effect.<\/span><\/p>\n

India\u2019s weight in the MSCI Emerging Markets index is likely to come down to 11.2% after the changes, as per IIFL Capital. India\u2019s weight has been falling for many months\u2013it was above 20% in late 2024\u2013as the country missed the AI-driven rally that has powered Taiwan and South Korea higher.<\/span><\/p>\n

In the broader market, the Nifty Midcap 150 eked out a 0.3% gain while the Nifty SmallCap 250 climbed more than 1% this week.<\/span><\/p>\n

Adani Enterprises was the top gainer this week as well as in May after the US dropped fraud charges against its billionaire chairman Gautam Adani. It climbed over 8% this week and almost 22% this month.<\/span><\/p>\n

IT stocks were mixed this week, with Tech Mahindra, HCL Tech and Wipro ending in the green but Infosys and TCS closing in the red.<\/span><\/p>\n

Tata Motors Passenger Vehicles, Larsen & Toubro, Eternal, Eicher Motors, SBI and Asian Paints were among the other stocks that rose this week.<\/span><\/p>\n

ONGC was the biggest loser this week as well as in May. It slumped 8.7% this week, extending its monthly loss to 11.4% as investors booked profits after the stock jumped 25% over the previous four months.<\/span><\/p>\n

Cigarette maker ITC, hospital operator Max Healthcare, index heavyweights HDFC Bank and Reliance Industries, FMCG giant Hindustan Unilever and drugmaker Sun Pharma were among the other major laggards this week.<\/span><\/p>\n

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Other Headlines<\/b><\/h3>\n

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