Trade cautiously, bourses warn investors

BSE lists out 2,135 illiquid stocks, while NSE names 350; advises due diligence

As part of their surveillance mechanism and to safeguard the interest of investors, leading bourses BSE and NSE have suggested extra due diligence in trading of illiquid stocks.

As per directions from market regulator Sebi (Securities and Exchange Board of India), the BSE has listed out 2,135 such stocks, while NSE has also named 300 illiquid stocks where additional due diligence is required.

Illiquid stocks are those where trading activities are limited and are said to pose higher risks to the investors as compared to the frequently traded shares. There are about 5,000 listed companies on the BSE, while NSE has more than 1,600 companies listed on its platform, and there are many common stocks between the two bourses. As per Sebi directions, the two exchanges are required to draw up a list of illiquid securities, based on a criteria jointly agreed with Sebi, and make it available to the trading members on a quarterly basis. Accordingly, the two exchanges have drawn up their respective lists of such illiquid securities based on trading activity during the quarter July–September 2012.

"Trading members are advised to exercise additional due diligence while trading in these securities either on own account or on behalf of their clients," BSE and NSE said in similar-worded separate circulars to their broker members.

These include a host of financial services firms and textile retail companies as also some newly listed firms.

The NSE list includes Ansal Housing and Construction, Bang Overseas, Bharatiya Global Infomedia, Bharat Rasayan, Aditya Birla Money, Celebrity Fashions, Cyber Media, Deccan Cements, Emkay Global, Gokaldas Exports, Indian Terrain Fashions, Indus Fila, Keynote Corporate Services, Khandwala Securities, Mawana Sugars and Mudra Lifestyle.

The BSE list includes Kinetic Engineering, Kirloskar Industries, Oswal Spinning & Weaving Mills, Modi Rubber, Sahara One Media and Entertainment, Scooters India, Benares Hotels, Jaybharat Textiles and Real Estate, Mahindra Composites and Gujarat NRE Coke Ltd.