The Impact Of Insider Trading On Stock Prices: A Critical Examination Of The Indian Market

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Uddipto Seal, B.A.LL.B. (H), Amity University Kolkata

Biswadeep Chowdhury, B.A.LL.B.(H), Amity University Kolkata

ABSTRACT

The insider trading debate boils down to a tension between market efficiency and fairness. Critics argue it destroys trust—why should ordinary investors participate if insiders have an unfair edge? Supporters counter that letting insiders trade speeds up price discovery, making markets more accurate. But this logic ignores the human cost. In India, where millions of new retail investors lack sophisticated tools, legalizing insider trading would tilt the scales even further toward the powerful. Ultimately, it's not just about economics, but what kind of market we want: one that rewards privilege or one that protects equal opportunity. The choice shapes both investor confidence and the market's very integrity. This paper examines the real-world impact of insider trading on Indian stock prices by analyzing concrete market patterns. By studying how share prices actually move before and after insider trading revelations, we uncover troubling truths about how privileged information distorts our markets. Through hard data rather than theoretical arguments, this study reveals the tangible consequences of India's insider trading challenge.

For Indian officials looking to preserve the vibrancy that has made India a desirable place for investment while bolstering market integrity, these foreign viewpoints provide insightful guidance. In the end, this study adds to the continuing discussion over market justice by showing that the consequences of insider trading stretch much beyond isolated instances of wrongdoing. In order to close current gaps, improve monitoring capabilities, and level the playing field for all market participants, the study ends with specific policy recommendations.

Keywords: Insider Trading, Stock Prices, Indian Stock Market, Market Efficiency, Investor Confidence, SEBI, Market Integrity, Corporate Governance, Retail Investors, Regulatory Framework

THE IMPACT OF INSIDER TRADING ON STOCK PRICES- A CRITICAL EXAMINATION OF THE INDIAN MARKET.

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