Market Manipulation
Conduct intended to create a false or misleading appearance of trading or an artificial price in a security.
How it is identified
Test: the conduct creates a false appearance of trading activity or an artificial price, whether by matched trades, circular trading, wash trades or misleading statements
Unit
qualitative
In depth
SEBI's prohibition of fraudulent and unfair trade practices covers a family of behaviours: circular trading between connected parties to generate volume, wash trades where beneficial ownership does not change, marking the close by trading near the session end, and spreading false information. What unites them is intent to mislead other participants about supply, demand or price. Exchange surveillance systems flag unusual patterns automatically, which is what triggers ASM and GSM inclusion as well as investigations. Penalties include disgorgement, monetary penalty and market bans.
Worked example
Two connected accounts trade the same shares back and forth, generating 4 lakh shares of daily volume in a stock that normally trades 30,000. The volume is real in the tape and represents no change of ownership.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Market Manipulation” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.