How Fake News Can Manipulate the Nifty: Need for SEBI Action
Today 05 Sep 25, a piece of misleading news circulated claiming that US President Donald Trump might impose tariffs on Indian IT companies. Several news channels reported this, citing Bloomberg and Reuters. However, both agencies later denied these claims. Despite the clarification which was late, Nifty fell by 200 points within just five minutes, highlighting the power of market manipulation through fake news.
How Operators Influence the Market
Market operators often exploit fake news or rumors to influence stock indices or specific company shares. By releasing unverified or misleading information through news channels or social media, they create panic among retail investors. Sudden selling pressure triggered by fear allows these operators to buy shares at lower prices and profit when the market stabilizes or sell.at higher prices and rebuy at lower prices.
Historical Cases of Nifty Rigging
India has witnessed multiple incidents where false information was spread to manipulate the market. For instance:
- 2015-16: Rumors regarding government policy changes triggered sudden volatility in Nifty futures.
- 2018: Fake corporate announcements about mergers and acquisitions caused certain index-heavy stocks to spike or drop abruptly.
- 2020: False COVID-related news led to unusual trading activity in IT and pharma stocks.
These cases demonstrate that unverified or sensational news can mislead retail investors and distort the market. Media channels broadcasting such news without confirmation play a significant role in enabling these manipulations.
Investor Takeaway
Investors must exercise caution and verify news before making trading decisions. Relying solely on sensational headlines can lead to unnecessary losses. Understanding the business fundamentals and market trends is crucial. For IT companies, focus on revenue growth, client base, and global demand rather than reactionary news.
How SEBI Can Prevent Market Manipulation
SEBI must act decisively against entities spreading fake news. Immediate investigations, hefty fines, and temporary trading suspensions can deter market operators from attempting similar manipulations. Transparency in reporting, verified information, and real-time clarification from credible sources are essential to maintain market integrity.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
Tags: Nifty, Market Manipulation, Fake News, SEBI, IT Stocks, Investor Awareness