To safeguard investors’ interest, leading stock exchanges BSE and NSE have advised their members to take extra caution while trading in around 300 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, both the exchanges 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 283 and 16 illiquid stocks, respectively, where additional due diligence is required.
Illiquid scrips listed by both the exchanges include Creative Eye Ltd, Bil Energy Systems Ltd, Software Technology Group International Ltd, Usha Martin Education & Solutions Ltd and Zenith Birla (India) Ltd.
Based on the trading activity from January to June, these 299 scrips will be traded in periodic call auction mechanism from July 10, the exchanges noted. 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.