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What Is Insider Trading? (Legal Disclosures vs Illegal Trading)

Updated 2026-11-03

"Insider trading" covers two very different things in India: legal, disclosed trades by company insiders, and the illegal practice of trading on secret information. The distinction is important.

Legal insider trading

Company insiders — promoters, directors, key employees — are allowed to buy and sell their own company's shares, but they must disclose those trades to the exchanges under SEBI's Prohibition of Insider Trading (PIT) regulations. These disclosures are public, and tracking them can reveal insider sentiment.

Illegal insider trading

What's illegal is trading on Unpublished Price-Sensitive Information (UPSI) — material non-public information (an upcoming result, a merger, a big order) — before it's released to everyone. SEBI investigates and penalises this because it harms ordinary investors who don't have the information.

Tracking the legal disclosures

The legal PIT disclosures — who traded, how much, at what price — are available per stock and market-wide. See how to track insider trades via API. Heavy insider buying can be a positive signal; heavy selling warrants a closer look.

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