To safeguard investor's interest, stock exchanges NSE and BSE today advised their members to take extra caution while trading in more than 450 illiquid stocks.
Illiquid stocks are those that cannot 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 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," NSE and BSE said in similar worded circulars to their broker members.
As per directions from market regulator Securities and Exchange Board of India (Sebi), BSE and NSE have listed out 413 and 43 illiquid stocks respectively where additional due diligence is required.
Illiquid scrips listed by both the exchanges include Bilpower, Gujarat Lease Financing, Tijaria Polypipes, Usha Martin Education & Solutions, Zenith Computers, Pradip Overseas and Goldstone Technologies.
In December 2014, 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.
