Pump and Dump
A manipulation in which operators inflate a security's price through false or misleading promotion, then sell into the demand they created.
How it is identified
Test: coordinated promotion raises price and volume in a low-float security, followed by concentrated selling by the promoters of that message
Unit
qualitative
In depth
The scheme requires a thinly traded security, because only there can a modest amount of buying move the price enough to attract attention. Promotion now runs through messaging groups, social media and unregistered tip services, and SEBI has passed multiple orders barring operators and disgorging gains. The tell-tale signs are consistent: an obscure company, a sudden coordinated message, upper circuits on rising volume, and a story that cannot be verified in the company's filings. Anyone who buys after the promotion begins is providing the exit, which is the design rather than an accident.
Worked example
A stock with 30,000 shares of daily volume rises 260% in six weeks on messages promising more. When the promotion stops, sellers meet a book with no buyers and the stock hits lower circuits for consecutive sessions.
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 “Pump and Dump” 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.