Pump and dump is a form of market manipulation in which fraudsters artificially inflate the price of a stock — typically a small-cap or penny stock with low liquidity — through false and misleading information, coordinated buying activity, and aggressive promotional campaigns across social media, messaging apps, and investment forums. Once the price has been pumped to a target level, the manipulators sell their holdings at the inflated price, leaving unsuspecting retail investors with worthless shares as the price collapses. In India, SEBI has taken strict enforcement action against pump and dump schemes, including orders against WhatsApp-based stock tip groups, unauthorised investment advisers, and circular trading arrangements used to create artificial volume. Retail investors should be highly sceptical of unsolicited stock tips promising extraordinary returns, and should verify any investment recommendation against the company's fundamentals and SEBI-registered advisory credentials.
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