The proliferation of fake news on digital platforms has emerged as a significant challenge to financial market stability, influencing investor sentiment and short-term price movements. Although prior studies have separately examined fake news detection and stock market prediction, limited attention has been paid to evaluating the direct market impact of fake financial news, particularly in emerging economies. This study investigates the effect of fake news on the Indian stock market by focusing on the NIFTY 50 index. An event-based methodology is employed to measure market reactions across multiple time windows, complemented by machine learning models to predict negative market movements following fake news dissemination. Empirical findings indicate that fake news contributes to statistically significant short-term declines in market performance, with the strongest impact observed within a three-day window. The results highlight market sensitivity to misinformation and demonstrate the effectiveness of integrating event-study analysis with machine learning techniques. This research provides novel Indiaspecific insights and contributes to understanding misinformation-driven inefficiencies in financial markets.