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In order to safeguard investor interest, country's leading bourse National Stock Exchange (NSE) has advised extra caution while trading in 25 illiquid stocks including EIH Associated Hotels, Golden Tobacco and SMS Pharmaceuticals.
Illiquid stocks are those that can't be sold easily because they see limited trading. They pose higher risks to investors because it is difficult to find buyers for them, as compared to the frequently traded shares.
"Members are advised to exercise additional due diligence while trading in these securities either on own account or on behalf of their clients," the NSE said in circular issued yesterday to their broker members.
As per directions from market regulator Securities and Exchange Board of India (Sebi), the NSE has listed out new 25 illiquid stocks where additional due diligence is required.
It further said that 385 such stocks would continue to remain in the category.
As per Sebi directions, the exchange is required to draw up a list of illiquid securities, based on a criteria jointly agreed with the regulator and make it available to the trading members on a quarterly basis.
Accordingly, the exchange has drawn up lists of such illiquid securities based on trading activity during the quarter July-September quarter of 2013.
The NSE listed illiquid scrips also include Pradip Overseas, Uniply Industries and Tijaria Polypipes.
