India Infoline advises clients to 'buy' and 'sell' same shares at same time

India Infoline had issued two different recommendations on Punj Lloyd to its clients on the same day

Have you ever come in contact with someone who advises you to buy and sell the same thing at the same time? No, then welcome to the world of Indian retail brokerages. One such brokerage, India Infoline, has come out with two different reports on Punj Lloyd Ltd on the same day but with opposite recommendations.

Both the reports, whose copies are with Moneylife, were published on 31 May 2010. In one report, India Infoline wanted institutional investors to 'sell' (which according to its recommendation structure meant, "Absolute-stock expected to fall by more than 10% over a 1-year horizon") shares of Punj Lloyd. It also gave a 12-month target price of Rs97 or 29% lower than the current trading price of Rs137 as on 28th May.

On the other hand, India Infoline's second report, issued on the same date and on the same company for its private client group recommended to 'buy' Punj Lloyd shares with a target price of Rs158 as against the closing price at the end of 28th May of Rs137. There was no time frame or limit mentioned for the target price in this report. According to India Infoline's recommendations parameters mentioned in this report, a 'buy' meant absolute return of over +10% (no time frame or limit mentioned).

For its private client group, the brokerage advised: "With a robust order book, the company is well covered for the next couple of years. The company does not have any legacy orders remaining to be executed and Punj Lloyd is shifting projects from Simon Carves to the parent entity. We expect the company's PBT to witness 74% CAGR over FY09-12E. We reduce our target price to Rs158 per share from Rs198 per share earlier to reflect concerns on extended period of non-billing its client and slow execution rate. However the recent correction in the price provides room for upside, hence we recommend high-risk investors to take exposure in the stock."

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."

There is no period mentioned in the report for the private client group. However, it is assumed that all brokerages use 12 months as standard period for target price.

So, the question still remains as to why the brokerage wants one group of its clients to sell and other to buy Punj Lloyd shares? Maybe the brokerage-and its clients-knew better.




5 years ago

If you are trading in NSE, BSE, MCX and in NCDEX then let sharegyan give you all stock trading gyan

Hemant Beniwal

7 years ago

Mera bharat Mahan!!


7 years ago

clearly shows how every one makes a fool of the retail and small investor , the company wants to give an exit to the retail clients by recommending them to buy


7 years ago

Let's do a simple transaction. Pick one stock , I will give 5 people 5 different recommendations on it 2 Buy, one Hold , 2 Sell all at different time periods and prices.
One of these will surely work out. After that I will advertise the successful transaction showing my excellent forecasting abilities.
Any takers?
In case if any body asks me how I can give 5 recommendations, I will say i am suffering from Ghajini effect and I give a different recommendation every 15 mins.
Do you want to invest with me?
If they really are not sure of their direction they should recommend a straddle option based strategy, this Chinese wall stuff is nonsense.
You never have Chinese wall for two teams in the same function. You have Chinese wall for teams in different functions e.g Investment Banking and Brokerage. When it doesnt work you say Chinese wall, when it works you say synergy and end to end solution
what bakwaas man


7 years ago

I dont think theres anything wrong with having differing views on the same stock within the same brokerage. For example, ICICI has differing views on TISCO, both of which were sent out on Jan 29th this year.



In Reply to Rakesh 7 years ago

Do you work for IIFL?

Alok Bhola

7 years ago

An excerpt from the clarification provided by IIFL:

"Each Research Team sends out its research ideas only to its particular set of clients via a mailing list. This is in line with the highest standards of corporate governance and gives assurance to our institutional clients. Further, research reports intended for retail and non-institutional clients may have mass access which will not be in line with expectations of our esteemed institutional clients."

Retail Client - Broken Heart

Alok Bhola

7 years ago

This is with reference to the clarification provided by IIFL.

Its very surprising that they came forward with totally dumb explanation expecting their clients to believe them (or maybe most of their clients are actually that dumb).

How would they explain the very different revenue and profit estimates for FY11 & FY12 in the two reports. Following are some of the figures from the two reports:

Private Client Group:
Revenues (Rs m) 129,920 165,904
EPS (Rs) 8.5 14.8

Revenues (Rs m) 101,311 115,867
EPS (Rs) 6.7 10.3

Does that mean that they expect the Company to report two totally different set of revenues and profits for retail and institutional investors!


7 years ago

Nothing wrong with what India Infoline did. They are well within the regulatory limits.

Shekar P

7 years ago

Great to see this, this shows how these people are utilising the innocence of Retail clients.


7 years ago

They could have written a single report

Buy recomendation for poor investors since they asked Institutions to sell and the same to be obsorbed. I don't think they are wrong. They have to get Institutions business as well as clients business also and earn brokerage from both sides. What's wrong ?, afterall its business you see.


7 years ago

Please everybody, give it a break! There is absolutely nothing wrong with what IIFL is doing. The reports are from two DIFFERENT DIVISIONS altogether. The institutional research is entirely insulated from retail research. That is how it is SUPPOSED to be as per SEBI and RBI regulations. One cannot possibly mix the two as far as running a brokerage business is concerned. It is as good as two different brokerage houses, in which case you can have two different views right? For eg if Goldman comes with a BUY reco on the same stock on the same day as Merill, will that be wrong? This is exactly the same situation here except for the fact that instead of two brokerage houses, you have two business divisions that are a part of the same brokerage. Ultimately no recommendation is sacrosanct. You may choose to follow any recommendation you want to or completely ignore all and do your own research.

Note: I have absolutely nothing to do with IIFL, neither do I have any friends/relatives here, hence my views are purely factual and unbiased and based on my knowledge of a brokerage business set up.


7 years ago

i dont think there's anything wrong with having two views as long as (going by what they have said) the views are for differing time periods and are for differing clients as well.



In Reply to Rakesh 7 years ago

Do you work for IIFL?

hitesh mehta

7 years ago

how it possible this is very bad

Arora Nikil

7 years ago

I feel this should be sent to SEBI and they will take care of the brokerage. This is clear issue of double standards.


7 years ago


If you really want to make big buckss do your own research, your assumption should include Macro economy, Micro economy, should be strong fundamentals and should Time the market with Technical analysis and last but not least you should go against the crowd to make Killing.

Daily Market View: The struggle continues

Part of the laboured up-move is the occasional fall, that we witnessed today

The market was down today, taking cues from weak global indices due to the debt crisis in Hungary. The Sensex was down 336 points (1.9%), at 16,781 while the Nifty ended at 5,034, down by 101.5 points (1.9%). The indices started the day with a sharp plunge and traded in a narrow range throughout the session. However, the market recovered on reports of the arrival of the monsoon, but that didn't provide much relief and it finally closed in the red.

Asian stock markets were down on Monday after Wall Street on Friday closed at its lowest level since February 2010, on disappointing non-farms payroll data and Hungary's debt problems. Key benchmark indices in China, South Korea, Singapore, Japan, Indonesia, Hong Kong and Taiwan were down by 1.57% to 3.84%.

US stocks were down to their lowest close since February on Friday on low jobs rate and concern over Hungary's debt crisis. The Dow was down 323 points (3.1%) to 9,932. The S&P 500 was down 38 points (3.4%) to 1,065. The Nasdaq was down 84 points (3.6%) to 2,219. Hungary will stick to 3.8% gross domestic product (GDP) budget deficit target agreed with international lenders for this year and will cut expenditures to achieve it, said its economy minister.

Hungary's government also stressed that the nation is not facing any sovereign credit default. An announcement last week by the government official on the poor fiscal health of Hungary worried investors globally dragging down indices in various markets.

Back home, the monsoon has arrived after being halted by a cyclone, and it has reached Kerala, ahead of schedule. The monsoon is expected to cover more areas of southern Karnataka, a big producer of cane and corn, from Monday.

Montek Singh Ahluwalia, deputy chairman of the Planning Commission said that fuel prices must be increased. Oil minister Murli Deora made a strong pitch for raising fuel prices ahead of Monday's meeting, saying it was needed to cut losses of State-run oil companies. The oil ministry is in favour of a gradual increase in fuel price starting with a quick rise in the petrol price and gradual increase in the diesel price.

Foreign institutional investors were net buyers on Friday of Rs100 crore. Domestic institutional investors were the net sellers of Rs126 crore.

Reliance Communications' (RCom) (up 4.6%) board gave its approval to divest 26% in the company to a strategic or private equity investor and explore merger & acquisition opportunities. Maytas Infra (down 4%) has received a contract worth Rs185 crore to build part of the metro rail network in Gurgaon. Maytas will build an elevated viaduct and six stations within 21 months for ITNL ENSO Rail Systems.

Apollo Tyres (up 0.6%) is reportedly gearing up to supply tyres to German carmaker Volkswagen as it looks to expand its global footprint. Pipavav Shipyard (up 0.4%) has received a Rs2,600-crore contract from the Indian Navy to build offshore patrol vessels. The private shipyard will build five vessels, each with a displacement of about 2,000 tonnes.

Reliance Industries (down 2%) may foray into nuclear energy and has indicated to the government that it is keen on generation and distribution of nuclear power.

Bhushan Steel (down 3.4%) plans to raise about $500 million to finance its greenfield projects, which will be raised in one or more tranches from domestic or international markets and may involve one or more currencies.

Nagarjuna Construction Company (down 3.8%) is planning to foray into the hospitality sector through unit NCC Urban Infrastructure, which plans to invest Rs250 crore-Rs300 crore to add hotels, resorts and serviced apartments to its real-estate offerings.







7 years ago

Too Good

EGoM defers decision on freeing fuel prices

Ahead of the meeting of a ministerial panel on fuel prices, Planning Commission deputy chairman Montek Singh Ahluwalia today spoke in favour of a hike in petrol and diesel rates

An empowered group of ministers (EGoM) today failed to arrive at a decision on freeing auto fuel prices from government control, but discussed the possible inflationary impact such a move would have, reports PTI.

Freeing petrol and diesel prices would have meant an up to Rs3.50 a litre hike in rates.

The oil ministry made a presentation to the EGoM, headed by finance minister Pranab Mukherjee, on the recommendations of the Kirit Parikh Committee that suggested freeing fuel prices from government control.

Oil companies have been selling fuel at less than the imported price and as a result suffer huge losses.

It was noted at the meeting that under-recoveries of oil marketing companies on account of current price structure and burden faced the government by way of compensating the companies during the period 2003-04 to 2009-10 was in excess of Rs3.45 lakh crore.

The possible inflationary impact of rise in the prices of petroleum products was also discussed.

Diesel, which is currently sold at a discount of Rs3.49 a litre, is the nation's most consumed fuel that is used in transport sector and hence has inflationary impact.

Overall inflation is currently close to 10% and is mainly driven by high food prices. A rise in fuel prices could fuel it further.

The eGoM came to the conclusion that further discussion would be necessary before views are firmed up.

A further meeting will be scheduled shortly, but no dates were given for the next meeting.

Ahead of the meeting of a ministerial panel on fuel prices, Planning Commission deputy chairman Montek Singh Ahluwalia today spoke in favour of a hike in petrol and diesel rates.

"For six months, I have been saying we should...I haven't changed my mind," Mr Ahluwalia replied, when asked whether this is the right time to increase fuel prices.

Mr Ahluwalia had told PTI in an interview, "India's international economic reputation requires us to say that fuel prices are going to be linked to global prices. I think that linkage (of fuel prices with global prices) is unavoidable."

However, he favoured providing subsidised kerosene to the poor-stressing on the need for exploring the possibility of giving direct subsidy.

State-owned Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum currently lose Rs203 crore per day on selling fuel below the imported cost.

They currently sell petrol at a loss of Rs3.35 a litre, while that for diesel is Rs3.49, Rs18.82 for public distribution scheme (PDS) kerosene and Rs261.90 for every 14.2-kg liquefied petroleum gas (LPG) cylinder.



passion group

3 months ago

Great analysis .i like your artical.


7 years ago

If the various taxes levied by the Government of India and various states constitues more than 50% of the price which we pay the petrol pumps, I wonder how the fuels are subsidized!!
The successive finance ministers have found it easier to levy higher indirect taxes on fuels as they are thoroughly incompetent in removing the widespread corruption in the direct and indirect tax collection mechanism. Due to this corruption, salaried class bears the brunt of taxes, and the wealthy business community hides its monies!!

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