Fundamental Glossary / Shareholding & Ownership
Insider Trading
Trading on unpublished price-sensitive information. The phrase is also used, loosely and incorrectly, for any trade by an insider.
Formula
Lawful insider trades are disclosed. Trading while in possession of unpublished price-sensitive information is prohibited under SEBI's insider-trading regulations.
What it means
Directors and employees may buy and sell when the trading window is open and they do not hold unpublished price-sensitive information. Those trades are disclosed.
Using confidential information, such as an unannounced result or a deal, to trade is the offence. The company's code of conduct sets blackout periods around results.
How to read it
A cluster of disclosed insider buying can show confidence. It can also be small relative to pay. Read the size and the price, not only the fact of a purchase.
What to watch
Do not treat every promoter sale as insider trading in the legal sense. A disclosed sale in an open window can be liquidity or diversification. An undisclosed trade on a tip is a different event. This page is a definition, not a finding about any person.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.