How Do Financial Constraints and Financial Returns Matter in Investment Management?: Evidence From Brokerage Recommended Stocks of BSE 100 in India

How Do Financial Constraints and Financial Returns Matter in Investment Management?: Evidence From Brokerage Recommended Stocks of BSE 100 in India

Rohit Sood
Copyright: © 2023 |Pages: 33
DOI: 10.4018/978-1-6684-6786-2.ch009
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Abstract

Brokerage houses are financial institutions that assist in buying and selling by acting as a bridge between the buyer and seller. These firms are members of the stock exchange. In India, the two largest stock exchanges are BSE and NSE. These exchanges are regulated by SEBI. In the financial market, there are various types of brokerage firms that are providing a wide range of products and services. The recommendations of buy and sell given by various brokerage houses are of use to various individual investors, fund managers, and academic researchers. Brokerage houses form a large part of financial sector and, as such, demand attention. There are many financial analysts employed by brokerage houses who produce earnings and stock price forecasts and also investment recommendations, and their opinions are reported through various channels like television, newspaper, magazines, and on social networking sites.
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Types Of Stock Rating

Terminology Used in Stock Market by Stakeholders

Buy: A buy rating means that a particular stock is worth to buy at the market price which is given at present and is destined to rise. Several firms use “Strong buy” to show their confidence about the price rise.

Sell: The sell ratings are usually given whenever brokerage houses believe that there in overvaluation in the prices of a particular stock or no fundamentals add to support any upside movement. Some analysts also use “Strong sell” to emphasize on liquidation of security.

Hold: A security given hold rating is expected to perform at a uniform pace as other stocks in the market.

Underperform: It is a recommendation which indicates that the stock is going to perform slightly worse than the others in the market. It can also be named as moderate sell, weak hold and under-weight.

Outperform: this recommendation indicates that the stock is expected to perform slightly better than the market return. It is also known as moderate buy, accumulate and over-weight. (Staff, 2018)

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