In India, We don't have separate group called independant analysts/ firms who doesnot involve in other market / corporate transactions in US or Europe. Even in well informed markets like US, there are serious analyst frauds leading to insider trading. So, its better to promote independant analyst firms for the sake of retail investors who are the less informed and major affected in emerging markets like India. Entities which involve in market / corporate transactions should be regulated not to offer research analysis or recommendations. Currently,Valuenotes and Myiris are good examples for independent analysis in Indian markets. This is the only way to preserve the integrity and openess of the market.
In the magazine OUTLOOK MONEY, the recommendations are reviewed after some time/months and again it is recommended for sell or hold or still buy. You can refer to the recent two issues as proof. I'm just started to follow it.
RE:Accountability?
by raghu hegde on Aug 28, 2007 02:45 PM Permalink
I am Sorry to say....... In our country, law is very specific., i.e. applies to few people only....
RE:Accountability?
by rohit sinha on Aug 28, 2007 03:00 PM Permalink
Analyst recommendation at the end of the day is just an "opinion" - having said, post the dot com bust, analysts are required to make full disclosure. So they have to disclose their methodology, parameters used, and also give a comparison of their target price vis-a-vis the market price. Also, there is a concept of a Chinese Wall between the research and brokerage sections of a firm - analysts cannot disclose any information to the broker, and also there cannot be direct professional exchange between them unless it is disclosed. So while the article makes sense, the analyst & broker being in cohorts is less now. Though, this is stricter in US than in India
RE:Accountability?
by xyz abcs on Aug 28, 2007 09:24 PM Permalink
dude no1 forces anyone to follow the advice..its your prerogative to follow it and if u burn ur hands doing so, its completely your fault
I am somewhat convinced with what is written here. Even when the market was falling these analysts were putting buy calls on most of the stocks. Also rather than specifying a particular stock for a sell call they say the sector won't perform well.
RE:Very Good Article
by Krish Srinivas on Aug 28, 2007 02:54 PM Permalink
Well Gaurav, this pretty much sums up exactly how much knowledge you have about how to inevst in stocks - ZERO!!! Because it is precisely when markets are faling that investors should BUY stocks, not SELL them. Your mentality is like a typical retail investor who buys when the stocks are going up and sells when they are coming down. You really need to learn more about investing, as you have shown your utter ignornace here on this forum.
Great article but as said "Investors should thus be careful and do their own homework on the stock, rather than buy or sell because of an analyst recommendation." what are the tools required to study a stock and how do we know where to invest
I think some more things could be added to the article --> 1. Most of the analyst firms are also the investment bankers of the company concerned. To get the business they don't want to placate the company by giving a Sell recommendation. 2. Most of the analysts give HOLD when they want to give SELL. I think HOLD could be a good proxy of when to sell. Certainly we need to be careful in separating genuine hold from the hold for sell. 3. These recommendations are given most of the time free of cost and therefore they don't do most of the hard work. 4. Buy side analysts employed by Mutual Funds etc will give genuine recommendation.
Take e.g of Kotak. They are the investment bankers and help with the IPO of the company. Their Buy side analyst will give HOLD for XYZ co because they may get business from XYZ Co but their sell side analysts employed by their MFs etc will give SELL recommemndation
RE:Article is incomplete
by rohit sinha on Aug 28, 2007 03:02 PM Permalink
agree with rohit a. there . The MF analysts would be less biased - however, their reports generally are meant for internal consumption rather than public usage
