What are the impediments faced?
When a price becomes “too high”, rational speculators from all across the country start selling shares of X. Hence, the amount of money required to distort the price is quite large relative to the size of trading (or “liquidity”) of the shares of X. Manipulators do not distort prices for fun: they distort prices in order to make money out of it. The bigger hurdle faced by the speculator is that of getting out of a manipulative position with money. It is one thing to put down a large amount of money into buying shares of X. The difficult thing is selling out and translating this into profit. When a price is known to be too high, no rational speculator will want to buy those shares. The manipulator is often reduced to unethical practices of locating some ignorant public sector bank or FII on whom the shares are dumped at the high price. This carries it’s own risks: it might not always be possible, and the manipulator can get caught. Manipulation will take place when the rational manipula
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