13.16What is market manipulation?
1What is it?
Market manipulation is artificially moving prices or volumes to mislead others: pump-and-dump, circular trading, fake news, or "front running" client orders.
2Why does it exist?
It cheats investors and is prohibited under SEBI’s PFUTP (fraudulent and unfair trade practices) regulations.
3Practical use
Warning signs: unknown small-cap stocks hyped on Telegram, WhatsApp or YouTube with "target prices"; sudden huge volume with no news; promises of guaranteed returns. SEBI has acted against "finfluencers" and pump-and-dump operators.
4Quick revision
- Artificially moving prices/volume.
- Illegal under PFUTP.
- Beware social-media hype in tiny stocks.
5Knowledge check
Q1. What is pump and dump?Show answer
Hyping a stock to raise its price, then selling to late buyers.
Q2. Which SEBI regulation covers manipulation?Show answer
PFUTP regulations.
Q3. A red flag?Show answer
Guaranteed return promises or tips on tiny stocks.