Faster data analysis, deep research, market predictions, large scale market surveillance, quick trade execution and similarly operating many more stock market related activities have been rapidly becoming swift & smooth with the help of advanced AI (Artificial Intelligence) tools & softwares but simultaneously it has been creating many legal & regulatory challenges as well. As of November 2026, India doesn't have any specific law to regulate AI in the stock markets thus the role of Securities and Exchange Board of India (SEBI) has become quite important to use its existing powers to prevent the misuse of technologies and maintain the fairness in securities market by eliminating the emerging AI related challenges. The authors in this paper by following the doctrinal method of research highlight the limitations of AI and explain why unregulated AI use in stock markets are highly unreliable & dangerous for the Indian economy. This paper strongly criticises the existing Indian rules & regulations for AI use and suggests introducing a specific strict law on AI use in stock markets along with strengthening the powers of SEBI.
