The stock market is indeed influenced but the ebbs and flows of investor money.
We used to hear earlier about how Foreign Institutional Investors (FIIs) would come in or go out and the prices would correspondingly move up or down. Now a days we hear about how Domestic money (through SIPs) is holding up the market even if FIIs are moving out.
Now coming to pump and dump, it may seem logical but the market regulator has put in many tight controls. Just like a car cannot travel through a city at a continuous speed of 150 km/hr for too long, the market has in place circuit breakers to control the break neck movement of a particular stock at various levels (5% to 20%).
Volatility affects stocks that have lesser ‘float’, i.e. freely available shares for trade. This is the case for small cap funds. This territory is best avoided, for retail investors who do not have time, energy and skill to track these companies. Too many people have fallen victims to ‘buy high and sell low’ in such stocks.
You are better off investing in mutual funds, that too in direct plans where there is zero commission. If you are already investing, consider switching your regular plans to direct on platform that also provides quality advice.
