The Indian stock market responds to every wave of news and sentiment, as lively and volatile as the people that drive it. Stock market news affects investor choices daily, from day trading to long-term investment. Yet while news is intended to educate, it can also mislead. In recent years, stock price manipulation through curated or fake news has emerged as a growing concern, creating unnecessary stock market volatility and distorting market fairness.
The Role of News in Market Movement
At its best, news brings clarity. Economic data, earnings reports, policy changes, and geopolitical updates all have real, measurable impacts on stock prices. For instance:
- A positive RBI policy update may lift banking and finance stocks.
- Defence sector announcements can spike public sector stocks.
- Budget allocations influence infrastructure and real estate stocks.
This kind of stock market news helps investors make rational, informed choices based on real developments.
When News Becomes a Tool for Manipulation
However, the same mechanism that moves the market can also be exploited to manipulate it. Here’s how:
1. Pump-and-Dump Schemes
Manipulators spread exaggerated or fake positive news about a stock to create hype. As the price rises, they exit with profits, leaving retail investors to suffer losses.
2. Fake Announcements
One misleading headline is all it takes to make investors either celebrate too soon or panic unnecessarily. A false claim about a company winning a major government contract can temporarily inflate a stock’s price.
3. Social Media Rumours
In the digital age, stock market volatility can be triggered by viral WhatsApp messages, tweets, or YouTube videos, often with no credible basis. SEBI has taken action against such acts, including fines on influencers for promoting penny stocks using fake news.
Case in Point: Adani vs Hindenburg
In 2023, Indian investors saw a tempest brewing when US-based Hindenburg Research labelled Adani Group as engaging in stock manipulation and corporate malfeasance. The news crashed like a shockwave,Adani shares fell by as much as 83% in some instances. Within days, billions of rupees in market value vanished, and countless investors,big and small,watched their portfolios shrink, shaken by the uncertainty and fear that followed. While Adani denied the allegations, the event exposed how influential a single report can be in driving stock price manipulation and destabilising investor sentiment, regardless of long-term fundamentals.
What Investors Can Do
- Verify before reacting . Use official sources like SEBI, NSE, or reputed financial media.
- Understand the fundamentals . Avoid making decisions based solely on breaking news.
- Avoid herd mentality, hype doesn’t equal value.
News is a double-edged sword. It can enlighten or mislead, depending on the source and intent. As seen in the Adani case, even established businesses are vulnerable to the power of perception. The key to protecting your investments lies in staying informed, questioning narratives, and focusing on long-term fundamentals to avoid becoming a victim of stock price manipulation.
