Essential guidelines for investors dealing with SEBI Registered Research Analysts — protect your interests and invest wisely
As an investor in the Indian securities market, it is crucial to understand your rights, responsibilities, and the best practices that can help you make informed decisions and protect your hard-earned money. The following Do's and Don'ts are designed to guide you when dealing with any SEBI Registered Research Analyst, including Kunal Bothra (SEBI Registration No: INH000005263).
These guidelines are based on the advisory issued by the Securities and Exchange Board of India (SEBI) and are intended to promote investor awareness and protection. Following these guidelines will help you avoid common pitfalls, protect yourself from fraudulent practices, and make the most of research services.
Ensure that the Research Analyst you are dealing with is duly registered with SEBI. Only SEBI-registered entities are authorized to provide research recommendations in India. You can verify the registration on the SEBI website.
Ask the Research Analyst to show their SEBI registration certificate. A genuine RA will always have their registration certificate and will be willing to share it. The certificate contains the registration number, name, and validity period.
Independently verify the SEBI registration number on the SEBI website (www.sebi.gov.in). Search for the registration number (e.g., INH000005263) or the name of the Research Analyst to confirm their registration status and validity.
Always make payments through proper banking channels such as NEFT, RTGS, IMPS, UPI, cheque, or bank transfer. Never make cash payments. Always insist on a proper receipt for every payment made. This creates an audit trail and protects your interests.
Before acting on any research recommendation, read the entire research report carefully. Understand the rationale behind the recommendation, the risk factors, the entry and exit levels, and the stop-loss. Do not invest blindly based on just the stock name and target price.
Do not hesitate to ask questions about any aspect of the research recommendation that you do not understand. A genuine Research Analyst will be transparent and willing to address your queries. Clear all your doubts before investing your money.
If any Research Analyst offers or guarantees assured returns, this is a clear violation of SEBI regulations. Report such practices immediately to SEBI through the SCORES portal (scores.sebi.gov.in). Guaranteed returns in securities markets are illegal.
Understand the risk you are taking per trade. The recommended risk per trade is 6%–16% of your total trading capital, with actual risk per trade at 0.24%–1.92% of capital. Follow proper position sizing guidelines to manage your risk effectively and protect your capital from significant drawdowns.
Never invest your entire capital in a single trade. Follow the position sizing guidelines provided in our research recommendations. Proper position sizing ensures that no single trade can cause irrecoverable damage to your portfolio, even if it results in a loss.
Never transfer funds to the Research Analyst for investment purposes. The RA's role is limited to providing research recommendations. They should never ask you to transfer money for investment, trading, or any other purpose. If anyone asks you to do so, it is a red flag.
Be cautious of advertisements that promise extraordinary returns, "sure-shot" tips, or "100% accuracy." These are marketing gimmicks used by fraudulent operators to lure unsuspecting investors. Similarly, do not invest based on market rumours or unverified tips circulating on social media or messaging apps.
Fraudulent operators often create a false sense of urgency by offering limited-period discounts, bonus services, or exclusive incentives to pressure you into subscribing quickly. Do not make hasty decisions based on such offers. Take your time to evaluate the service and the Research Analyst before subscribing.
Never share your trading account login ID, password, PIN, OTP, or any other credentials with anyone, including the Research Analyst. A genuine RA will never ask for access to your trading or demat account. Sharing credentials can lead to unauthorized trades, misuse of funds, and financial loss.
There are no guaranteed returns in the securities market. Any person or entity that promises or guarantees returns is likely engaging in fraudulent activity. The stock market is inherently volatile and unpredictable. Even the best research recommendations can result in losses due to unforeseen market conditions.
Never enter a trade without understanding the risks involved. Every trade should have a defined stop-loss, and you should be prepared for the possibility of the stop-loss being triggered. If you do not understand the risk-reward profile of a trade, it is better to stay out of it.
Only follow recommendations from SEBI-registered Research Analysts. Unregistered advisors, social media influencers, and WhatsApp/Telegram groups offering stock tips are not regulated by SEBI and may have hidden agendas. Investing based on unverified tips can lead to significant financial losses.
Never ignore or remove the stop-loss provided in a research recommendation. The stop-loss is your safety net — it limits your potential loss on a trade. Removing or widening the stop-loss beyond the recommended level can expose you to much larger losses than anticipated.
Understanding and managing risk per trade is fundamental to successful trading and investing. The following table outlines the recommended risk parameters and position sizing guidelines that every investor should follow:
| Parameter | Conservative | Moderate | Aggressive |
|---|---|---|---|
| Risk per Trade (as % of Capital) | 6% | 10% | 16% |
| Actual Risk per Trade (as % of Capital) | 0.24% | 0.80% | 1.92% |
| Maximum Positions at a Time | 5–8 | 8–12 | 12–16 |
| Stop-Loss Adherence | Strict (No exceptions) | Strict (No exceptions) | Strict (No exceptions) |
| Capital Allocation per Trade | Equal weighted | Equal weighted | Equal weighted |
Key Insight: The actual risk per trade (0.24%–1.92% of capital) is much lower than the risk per trade (6%–16% of capital) because position sizing ensures that only a small fraction of your capital is at risk on any single trade. This is achieved by calculating the position size based on the distance between the entry price and the stop-loss level.
Be alert and cautious if you encounter any of the following red flags when dealing with a Research Analyst or any other market intermediary:
If you encounter any of these red flags, please report them to SEBI through the SCORES portal (scores.sebi.gov.in) and exercise extreme caution before engaging with the entity.