Since morning, there were all kinds of rumors that India has attacked Pakistan and that some covert action is taking place. Interestingly, despite such geopolitical noise, the market remained flat the entire day. There was no panic or fear observed, and all the early morning gains were given up. It was more of a wait-and-watch kind of day with minimal market movement, except for one segment — defense stocks.

Defense stocks went through the roof, reacting as if orders would be placed today, production would start tomorrow, and the equipment would be deployed the next day. That’s how sentiment plays out in markets. So, to sum up, it was a quiet day in terms of index movement, but a high-action day for defense stocks.

In the second half of this video, we’ll cover an important topic: spoofing — a scam that SEBI has recently unearthed. This is a lesser-known concept for many retail investors, and we’ll break it down in detail. We’ll discuss how some participants misuse the marketplace through intermediaries, attempt to front-run, and manipulate the system. We’ll also see how regulators act swiftly to correct such wrongdoings.

Where is the market headed?

Market Overview

As mentioned, the market was absolutely flat, with Nifty moving just 0.03%. Over the last five sessions, we’ve been hovering in a narrow range. One session did witness a major drawdown, but support was taken at previous highs, and prices rebounded. We’re currently at levels that match the January top, which is not a bad place to be at this stage of the market.

Nifty Next 50

Nifty Junior was down 0.23%, again indicating lackluster activity.

Nifty Mid and Small Cap

Midcaps and small caps rose 0.2% each.

Bank Nifty

Bank Nifty was absolutely quiet as well, down by just 0.07%. Given the flatness, we won’t spend much more time discussing market movement.

GOLD

Gold remains sluggish, down 0.78%, but it isn’t dropping significantly either. Many investors are waiting for a bigger correction to accumulate, but that hasn’t materialized. In fact, gold seems primed for a breakout, potentially triggered by one major global event.

Advance Decline Ratio

The market breadth was dull, with 225 stocks advancing and 275 declining.

Heat Maps

Heat maps were led primarily by Reliance, which gained 2.2% today after a 5% rally yesterday. Trent and Tech Mahindra also moved up slightly. On the losing side were Sun Pharma, UltraTech Cement, ONGC, Coal India, Kotak Bank, SBI, and Power Grid.

In the Nifty Next 50 space, performance was mixed. Defense stocks like HAL moved up, while Chola Finance, Lodha, DLF, PFC, REC, Adani stocks, JSW Energy, TVS Motor, and LTIM saw some corrections.

Sectoral Overview

Sectorally, Defense stocks surged 5% today. Looking at the longer trend, Defense has gained 14% over the past month, 21% in the last three months, 17% in six months, and is the second biggest gainer over one year, just behind the capital markets segment.

Sectors of the Day

Nifty Defence Index

The Defense Index has hit a new high, surpassing its December peak. Since the Defense Index was introduced only in November, we don’t have earlier data. Key performers include Paras Defense (up 17%), Data Patterns (up 14%), GRSE (up 11%), and Cochin Shipyard. These stocks were leaders in 2024 and are running hard once again.

Story of the Day

Spoofing is a manipulative trading technique used to trap investors by creating a false sense of demand or supply. SEBI has cracked down on one of India’s largest spoofing cases, involving a brokerage firm and 173 stocks.

What is order spoofing? It involves placing large bid or ask orders with no intention of executing them, solely to influence the market. The goal is to mislead other investors, prompting them to act in a way that benefits the spoofer. While fake interest is shown on one side, real trades are executed on the opposite side, enabling profitable exits for the manipulator.

Example: Suppose stock XYZ is trading at ₹100. The spoofer wants to sell at ₹104 but doesn’t find buyers. So, they place massive buy orders at ₹95-96, showing fake demand. Seeing this, retail investors assume a big buyer is about to enter and push the price higher in anticipation. As the price inches up, say to ₹104, the spoofer sells their actual position. After the sell, they cancel the fake buy orders. Once the spoofing stops, the price often returns to normal levels, say ₹98-100. The spoofer has successfully manipulated the market for personal gain.

In the recent case, Patel Wealth Advisors Pvt Ltd was found guilty. Their spoofing activities spanned three years, across both cash and derivatives segments. SEBI identified 621 instances across 173 stocks, though there may have been more.

Why is spoofing dangerous? Because it misleads genuine investors, creates artificial price swings, erodes trust, and distorts the market’s natural efficiency. It also preys on fear of missing out (FOMO) and the herd mentality, which are especially common among retail participants.

SEBI responded firmly. The whole-time member stated that allowing this activity to continue would severely erode the integrity of the market and harm investors’ interests. Spoofing is now clearly identified as manipulative, fraudulent, and unfair. The company and its directors were banned from trading, and profits made through spoofing are to be disgorged.

This is not India’s first spoofing case. In 2023, Nimmi Enterprise was found manipulating the cash market for eight months using fake buy orders. Regulatory actions included restrictions and penalties.

On the global stage, the 2010 flash crash was attributed to spoofing by Navinder Sarao, who operated from his bedroom in London. He used custom software to manipulate the S&P E-mini futures, and was later extradited, pleaded guilty, and sentenced to home confinement.

Michael Kostia’s 2013 case in the U.S. was the first criminal conviction under the anti-spoofing rules of the Dodd-Frank Act. He was sentenced to three years in prison and fined $6 million.

In China (2018), two traders were caught spoofing copper and rubber futures. Their licenses were revoked and heavy penalties were imposed.

A notable large-scale manipulation occurred at JP Morgan Chase in 2020, where traders spoofed precious metals and US treasuries for eight years. This resulted in a $920 million settlement with U.S. regulatory authorities.

These cases highlight that spoofing is not limited to small players. Even global financial giants have indulged in such practices.

Key takeaway for retail investors is to stay vigilant. Large orders in the order book may be deceptive. Avoid chasing artificial momentum, especially sudden spikes driven by big order flows. Always remain calm and rational. Spoofers rely on retail participants acting emotionally and making hurried decisions.

Momentum strategies should be based on sustained trends, not knee-jerk reactions. These strategies typically respond to movement over weeks, not seconds or minutes.

In this episode of the Momentum Podcast by Weekend Investing, we sit down with Sudheer , a software engineer from Infosys who shares his honest and inspiring investing journey—from early losses in derivatives and scams to his turnaround using Weekend Investing’s smallcases.

💡 Hear how Sudheer allocates ₹30,000/month, balances risk with gold, navigates market dips confidently, and the crucial mindset shift he learned through momentum investing.

👉 Don’t miss Sudheer’s powerful advice for new investors and the importance of discipline and long-term thinking.

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