D-Street's 'pump and dump' schemes go digital way

Mumbai: The dubious 'pump and dump' schemes of Dalal Street operators are taking on new forms. Operators are using the so-called digital marketing methods to boost popularity of illiquid penny stocks, before dumping them on unsuspecting retail investors. The matter came to light recently after some popular market analysts on Twitter claimed that a marketing firm had approached them to talk up a relatively-unknown stock.

Alok Jain, founder of Weekendinvesting.com, an advisor with 1.88 lakh followers on Twitter, tweeted that some people approached him with money to pump up the stock of Salasar Techno. "Please be careful of Salasar ... this is likely a pump and dump story ... many influencers are being approached to push this in return for INR 25-30K (₹25,000-30,000)," he tweeted.

Another trader Shravan Venkataraman with over 16,200 followers on Twitter claimed that a digital marketing agency contacted him for a promotional tweet. "I usually promote any good tool or software, or anything useful for the followers. But this took me by surprise. Those who are holding Salasar Techno, be careful."

Salasar Techno is a construction and engineering company with a market capitalisation of ₹725 crore. The stock gained 10% on Wednesday to close at ₹253.85. The company is not tracked by analysts and the stock is not held by institutional investors. It is not clear who appointed the digital marketing firm to promote the stock. An email query to the company did not elicit any response.

Some analysts with huge Twitter following had recommended buying the stock on the grounds that it's a company that manufacturers towers that provide a one-stop-shop for Indian telecom giants. However, many have deleted their tweets after getting slammed on social media. Amid the raging rally in the stock market till October 2021, recommendations of several unknown penny stocks were flying thick and fast.

Market participants said in addition to popular Twitter handles that were speculated to be associated with various operator groups, managers of various Portfolio Management Services (PMS), which usually deal in illiquid small-cap stocks, too were resorting to ‘soft marketing’ to push their stocks. Following the sell-off in market, such instances have subsided.

The intention of talking up stocks of late could be to whip up retail investor activity in them that will help operators get exit.

“The modus operandi is the same, but now the operators have changed their methods by offering money to influencers on Twitter,” said Shriram Subramanian, founder, and MD, InGovern. “Sebi has started to crackdown against the circulation of illegal market tips over social media platforms.”