Recently there was a news that RIL and Mukesh Ambani have been fined by SEBI. Mukesh Ambani has been fined ₹ 250000000 while RIL has been fined ₹ 100000000.
SEBI alleges that Mukesh Ambani’s RIL has profited from wrongful manipulation of the company’s shares. While investors had no idea about this. SEBI says that this is completely wrong and any kind of manipulation in the stock market is a fraud with investors. Which should be dealt with strictly. After this, the question is starting to arise whether all the big companies are making money by cheating in this way? And investors’ money is constantly sinking. However, there is no evidence so far as to whether other big companies are committing fraud in the stock market in the same manner. But you have told in the web series on Sony Live that how the stock market is fraudulent. And gross profits are made.
How to protect yourself from this manipulation and invest in the stock market? A company’s stock can be manipulated either by promoters or by large investors. The possibility of disturbances in the stock markets of any company by a small investor is very rare.
How are the prices of companies decided in the stock market?
Stock prices of companies in the stock market are based on demand and supply. If the demand for the company’s stock is high in the market then its price goes up. Whereas if the demand for the share of a company decreases in the market then its price goes down. And from this, the valuations of companies are decided in the market. The more expensive the share of a company, the higher its valuation.
Suppose the stock of a company has come down to ₹ 1000 or more, then people start buying the stock of that company. When the stock of that company, for example, becomes expensive by ₹ 2000 or more, then people sell the city for profit. That way the stock goes back down again, and it goes on and on.
But if the price of a company is increased by purchasing the stock in an artificial way, then it is under fraud. Institutions such as SEBI have been created to look into cases of this manner in India.
How do big companies menuplate their company’s shares?
Big companies are making huge profits by manipulating the shares of their own company. This was also seen recently with RIL, the country’s largest company. It is believed that large companies of the country cannot make a mistake in this manner. But it was fraudulent nonetheless.
In such a situation, the question arises that how do big companies manipulate their shares? In what other way does the stock market make big profits. There are 2 methods of manipulating a company’s stock.
If you want to buy a stake in any company, for this you can buy shares of that company from the stock market. We give you the example of Reliance here. Suppose the price of 1 share of RIL is ₹ 2000, so if you want to buy a stake in RIL, at least you must buy one share. If the price of this share goes up then you benefit. But if the share price of Reliance falls below ₹ 2000, then you lose.
- Pump and dump method
The commonly used method for bringing down and manipulating the stock of companies in the stock market is called pump and dump method. This method is a classical method. It consists of promoters and agents of the company who buy a large amount of the company’s stock and later sell it at a higher price.
Here we explain this method of disturbances in the stock market by giving an example. Suppose the price of a company’s stock is ₹ 1000. But if the promoters and agents want to increase the share price of that company, then they will buy the shares of that company. Suppose the promoters and agents of that company together bought more than one lakh shares. In this way, the shares of that company get affected in the market. Later here, promoters and agents jointly run false campaigns related to the company in the market. False advertisements are given and a good atmosphere is created for the company in the market. After this, when the share price of the company increases, these promoters sell it back in their stock market. And in this way, big profits are made by fooling investors.
This is an artificial way of increasing the price of a company’s shares, which is not based on the demand for the actual shares of the company in the stock market. The scams that gangs do in the stock market in this way are called bullcartals.
However, in order to do this type of scam, you must have a large amount of money. In such a situation, it can be said that small investors cannot do this type of scam in the stock market.
- Short selling
This is the second most common method of scam in the stock market. This method is exactly the opposite of the former. When the shares of a company go to a very high height, a large number of the company’s shares are sold in the market. And when the price of the company’s shares in the stock market goes down significantly, further false rumors about the company are spread in the market. The company’s performance is also said to be poor. So that people start selling the company’s stock in the market. These are then bought back at a lower price. And once again the company’s shares get shortage in the market. This cycle continues in this way. And this type of gang makes a huge amount of profits in the stock market. This type of gang is called Bearcartal in the stock market.
How to protect yourself from manipulation in the stock market
If you invest in the stock market, then the question arises that how to protect yourself from the manipulation or scam in the stock market? There can be many ways.
The first way is to invest only in companies that are well known in the country. Such companies are very unlikely to be scams. Invest in companies that are necessary for the country’s economy. We can give you an example of the Tata group here. If you invest in the Tata group, it is very unlikely that there will be a scam.
Avoid the false information about the shares of the company being spread through Television internet or SMS. Do not trust any such information. Unless you have a solid source.
If you are investing in the stock market, then our advice would be that you invest in the stock market for a long time. This way you can avoid any scam in the stock market.
Do not invest in any company’s stock just because its market prices are going up. Rather, you should also try to check the company’s fundamental. Also, see how much the company is likely to grow in the coming times. When the stock of a company goes above the required height, people start making profits. And from there once again the shares of the company start coming down. In such a situation, do not invest on the advice of anyone. Trust your analysis and trust more.
Stop loss is another way to avoid high losses in the stock market. This is a fundamental method when investing in the stock market. If the shares of a company have gone down by more than 20%, then you can sell it to those shares with a loss. Because if the share of a company has gone below 20% then it can be assumed that in the coming time, the shares of that company may go down even more.