To safeguard investor interest, stock exchanges NSE and BSE have advised members to take extra caution while trading in 386 illiquid stocks.
Illiquid stocks are those that cannot be sold easily because they see limited trading. These stocks pose higher risks to investors because it is difficult to find buyers for them as compared to frequently traded shares.
In similar-worded circulars, NSE and BSE advised their trading members “to exercise additional due diligence while trading in these securities either on own account or on behalf of their clients.”
BSE and NSE have listed out 357 and 29 illiquid stocks, respectively, where additional due diligence is required.
Illiquid scrips listed by both the exchanges include Goldstone Technologies, Usha Martin Education & Solutions, Khaitan (India), Pradip Overseas, Todays Writing Instruments Hotel Rugby, Blue Chip India and Gujarat Lease Financing.
The exchanges said that periodic call auction will be conducted in these 386 securities with effect from January 11.
These securities are based on trading activity during the period during July-December.
In December 2014, capital markets regulator Sebi had relaxed norms for trading in illiquid stocks. The move was aimed at shifting various illiquid scrips to normal trading session from the periodic call auction, the window where these stocks are currently traded.