Imagine you are conducting a channel check for a large pharmaceutical firm. During a site visit, the CFO casually mentions that the company has received a major regulatory approval that will likely double their earnings over the next year. This information is not yet on the stock exchange website or in the public domain. If you publish your report immediately, you are not just an analyst; you are potentially participating in a violation of the Principles of Fair Disclosure.
Your professional duty is to ensure that price-sensitive information is disseminated to the public at large, rather than selectively leaked to a few institutional clients or research analysts.
The Code of Practices and Procedures for Fair Disclosure, mandated under SEBI’s PIT Regulations, requires listed companies to have a robust mechanism for the timely and uniform dissemination of Unpublished Price Sensitive Information (UPSI). As an analyst, you are a critical link in this information chain. If you encounter non-public material information, your ethical and legal obligation is to encourage the company to make a public disclosure to the stock exchanges. Failing to do so creates a state of information asymmetry that the regulatory framework is specifically designed to eliminate.
Consider the impact on your valuation model. If you act on information that has not been fairly disclosed, your model’s accuracy becomes secondary to your legal exposure. For instance, if you build a target price based on leaked data and share it with your clients, you have bypassed the market’s right to access that same information simultaneously. This behavior undermines the efficiency of the Indian securities market and exposes you to severe penalties under SEBI’s enforcement regime.
The Principles of Fair Disclosure are designed to ensure that the retail investor, who relies on exchange filings, has the same analytical head start as a deep-pocketed institution.
In practice, this means your interaction with investor relations (IR) teams should be professional and boundary-driven. If a company representative offers ’exclusive’ news, your immediate response should be to ask if this has been disclosed to the exchanges. By maintaining this standard, you protect your professional license and ensure that your research adds value through insight rather than through the exploitation of non-public information. Transparency is not just a regulatory hurdle; it is the currency of trust between you, the company, and the investing public. 1 2
Nuance
Check Your Understanding
A company representative shares an upcoming acquisition target with a select group of analysts during an investor conference before filing it with the NSE. As a research analyst, what is the most compliant course of action?
Which entity is primarily responsible for framing the Code of Practices and Procedures for Fair Disclosure under the SEBI (PIT) Regulations?
This is a companion read for Section 14.2 — Important regulations in Indian Securities Market from PASS Research Analyst Certification Examination by Akhilesh Gururani, available on Amazon Kindle.
Copyright © 2026 Akhilesh Gururani. All rights reserved.
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Unpublished Price Sensitive Information (UPSI) refers to information not generally available which, upon becoming public, would likely materially affect the price of the securities. ↩︎
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Disclosure to stock exchanges is the primary mechanism for ensuring information reaches the entire market simultaneously, preventing selective access. ↩︎