Limitations and Compliance Reminders (SEBI Context)

AI in stock screening sounds powerful.

It can pull fundamentals, technicals, and even news into a single query.

But before jumping in, it’s important to know the limits.

In India, SEBI has clear rules to protect investors from unverified advice and misleading tools.

Limitations of AI Screeners

Even the best AI has boundaries.

• Data Quality: AI is only as good as the data it gets. If data is outdated or wrong, the results will also be wrong.
• Hallucinations: Sometimes AI can give answers that sound correct but aren’t based on real data. This is common when AI is not directly connected to verified market sources.
• No Predictions: AI can’t “see the future.” It can only highlight patterns from past or current data. Using it for sure-shot calls like “This stock will double” is dangerous.
• Not Foolproof: A strong AI screener may still miss sudden events like government policy changes, global crises, or company-specific news.

Compliance in the Indian Market

SEBI has clear guidelines when it comes to investment platforms and financial communication:

• No Guaranteed Returns: Any tool or course must never claim “This stock will make you rich.”
• Not a Recommendation: Screeners can filter lists, but they cannot be positioned as stock tips or buy/sell calls.
• Risk Disclosure: Users must be told that markets carry risk, and screeners are only for educational purposes.
• Transparency: If data is sourced from public platforms, it must be clearly stated. Hidden or unverifiable sources are a red flag.

What This Means for You

When using AI screeners in India:

• Treat the output as a shortlist, not as a trading signal.
• Always do your own research before making decisions.
• Remember that SEBI-approved advisors are the only ones allowed to give investment advice.
• Use AI as a time-saver and guide, not as a substitute for judgment.

How to Stay Within Limits

1. Use AI only for filtering, not tips

• Safe: “Find Nifty 100 stocks with P/E below 20 and ROE above 15%.”
• Not safe: “Tell me which stock will double next year.”

2. Always cross-check with official sources

• Verify results with NSE/BSE filings, company reports, or SEBI announcements.
• Treat AI’s list as a starting point, not an endpoint.

3. Add risk disclosures to your own notes

• Example: “This is an AI-generated shortlist for study purposes, not investment advice.”

4. Avoid vague or speculative prompts

• Don’t ask: “Which stock is a guaranteed winner?” Instead: “Filter auto stocks under ₹500 with 3-year profit growth above 10% and debt-to-equity below 0.5.”

Final Takeaway

AI screeners can speed up your research, but they’re not advisors.
Under SEBI rules in India, no tool can promise profits or act like a tip provider.

The safe way to use AI is to treat it as a research companion helping you filter smarter and faster, while you stay in full control of the final analysis and decisions.