Shady traders manipulate India’s stock market via Twitter
On March 7, the Twitter account of Aditya Kondawar, Chief Operating Officer at JST Investments, saw a flurry of particular requests. Three digital marketing agencies contacted him via Twitter, offering Kondawar money in exchange for tweeting about a particular company. The moment the Third Agency reached out, Kondawar knew what was coming. “Let me guess. You want me to tweet about Salasar Techno? He asked. He was right.
Kondawar, who has more than 72,000 Twitter followers, was just one of many “stock market influencers” who received the same proposal. Many accepted the offer. However, coordinated tweets about Salasar Techno by more than 25 accounts quickly aroused suspicion. Soon, screenshots of agencies reaching out to influencers flooded the social media app.
Alok Jain, the founder of Weekendinvesting.com, even tweeted a warning. “Please be careful of Salasar…it’s probably a pump and dump story…many influencers are approached to push this in exchange for INR 25-30K (Rs 25,000-30,000 [US$328.77-US$394.53]),” tweeted Jain, who has 188,000 followers on Twitter.
After it became clear that there was an orchestrated campaign to promote Salasar Techno’s stock, a number of influencers deleted their tweets praising it. It is unclear who appointed the digital marketing company to promote the stock. In a press
Clarification on messages posted on social networks
dated March 10, the company clarified that it had no role in the circulation of these messages.
Nonetheless, the New Delhi-headquartered telecom tower maker’s stock rose almost 10% on March 9, with no other factors justifying the sudden jump. The stock has a low
Free float is a measure of the actual availability of a company’s shares on the public investment market.
, whose promoters hold nearly 70% of the shares. With a market capitalization of Rs 648 billion ($85.2 million) and a trading volume of 73,040 shares, it is extremely sensitive to demand and supply-induced volatility. This makes it ideal for “pump and dump” schemes – where stock values are artificially inflated by false or exaggerated claims – evolving in the age of social media.
The Salasar Techno incident was not aberrant. Such campaigns are increasingly common, with no indication that these mentions are sponsored. However, while such practices are quite common (even if frowned upon) when it comes to products and services, it amounts to market manipulation when it comes to stocks.
Market regulator Sebi is already cracking down on the phenomenon.