Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
General

India Infoline Recommends A Buy and Sell, on the Same Stock

India Infoline publishes two very interesting reports, dated May 31.

image

And:

image

The first one is only for their “private client group” and the second one, a free report for all.

To confuse things further, Anu Jain of IIFL’s Private Wealth Management said “Punj Lloyd can go down 7-8%” (CNBC-TV18, June 03)

Moneylife talked to their VP of Corporate Communications. Or mis-communications.

When contacted, Harshad Apte, India Infoline’s vice president for corporate communications, said, "Both these reports are in fact, targeted and sent to two separate set of customers and also both these recommendations are for differing time horizons. One of the recommendations (IIFL Private Client Group) is for the retail clients and carries a shorter time horizon while the other one is meant for institutional clients and is for a longer time horizon."

Now I will pause to let you finish laughing.

(Pause)

This is such utter bullshit. Most such recommendations are either prepared by different people who have no idea what the other one is saying, and the head of communications is not doing his job, or it’s simply a way to push one set of people to do something that another set will profit from. They say don’t ascribe to malice that which can be adequately explained by incompetence, but in the world of money, incompetence is a veil behind which a lot of malice hides. In fact, the standard defense is that “time frames are different” – well, the time frames need to be specifically mentioned (there were not) or they should have revealed that they had a sell recommendation as well.

In 2006, Easop Matthew was rapped by SEBI for issuing recommendations where in his personal trading accounts, he did the exact opposite of what he recommended (Sold Kalpana Industries when he recommended a Buy and so on). His defense, which was later accepted by the Securities Appellate Tribunal or SAT, was that the timeframes were different. Go through the links, you will find yourself laughing once again about the timeframe defense.

When your broker tells you to buy or sell, watch out! I get the jitters when these fellows “discover” stocks I own, only because I smell manipulation.

  • Buzz says:

    >i dont suppose there is anything wrong with having separate recommendations as the clients are separate. one is for PCG whereas the other is for Institutional. infact i think this is good

  • Raghavendra Shenoy says:

    >very well written. Though they say that the target groups are different and so are the timeframes, i've not seen the timeframes mentioned explicitly in the report. Have seen a similar thing happen @ another Indian brokerage which now has a bank under the same umbrella, during my MBA internship.

    Investors are better off spending time doing their own bit of research, rather than depending on these chaps.

  • Sachin says:

    >Hey Buzz ,
    Do you know what Honesty and integrity means ?
    Or atleast do not defend those who are doing wrong.

  • Anonymous says:

    >IIFL is learning from their Guru Goldman how to do business.

    Traderji

  • Anonymous says:

    >Integrity means for all those who do NOT understand it:

    Integrity = Be you word

    Period..

    Cheers

  • Tushar says:

    >Broking Firms should not be allowed to recommend to their clients to buy or sell. Period.

    Why is no one talking about this financial reform?

  • Manish says:

    >Interesting thing here is that IIFL suggesting Retail investors to BUY in shorter duration and recommending Institutional players to SELL in the longer run. So they want retail investors to be Bali Ka Bakra.

    Also, how can you recommend SELL for longer run? What is the time horizon for longer run?? When should one SELL? This is utter nonsense.

  • Anonymous says:

    >SEBI do not have time to check all these things. They are busy with removing the IFAs from the Mutual Fund activities.