The democratization of financial markets in the post-pandemic era has led to an unprecedented surge in retail participation in the Indian stock market. Concurrently, the rise of financial influencers, or 'finfluencers', on platforms like YouTube, Instagram, and Telegram has fundamentally altered how young investors acquire financial literacy and investment ideas. While these platforms have improved market accessibility, they have also become breeding grounds for market manipulation, particularly the modern iteration of the 'pump-and-dump' scheme. This research paper investigates the impact of social media stock recommendations on the buying behavior of retail investors. Through primary data collected via a structured survey of young traders and finance students, this study explores the extent to which retail investors base their capital allocation on unverified 'tips' over fundamental analysis. The paper further evaluates the efficacy of the Securities and Exchange Board of India's (SEBI) recent regulatory crackdown on unregistered investment advisors. Findings suggest that despite growing regulatory oversight, psychological biases such as FOMO (Fear Of Missing Out) and the herd mentality continue to drive retail capital into micro-cap and penny stocks touted by influencers, often resulting in significant capital erosion. The research concludes with recommendations for both regulatory bodies and retail market participants to foster a more resilient and informed trading ecosystem.

Shobhit Jain, Prof. Kushal M. Dharmik, "Influencer Hype and the “Pump-and-Dump" Effect on Retail Traders" International Journal of Scientific Research and Engineering Development, V9(5): Page(1711-1715) September - October 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.