So I was buying a penny stock which through my research of technical and fundamental knowledge looks a good buy but I came across this “periodic Call for illiquid sec” notification from Zerodha and read through the details. Just want to understand there is no harm in buying such stocks right?
I understand it is illiquid but if my view is longterm and not trading I can buy it right? it won’t get delisted ?
Hi @varun_10
These are naturally more risky stocks amongst penny stocks due to them being illiquid.
As per the regulations:
Scrip will be moved out from periodic call auction if the following exclusion criteria’s are met:
- Scrips with average market capitalization more than Rs.10Cr.
OR
- Scrips where company is paying dividend in at least two out of last three years.
OR
- Scrips where company is profitable in at least 2 out of last 3 years, and not more than 20% of promoters shareholding is pledged in the latest quarter and book value is 3 times or more than the face value.
https://www.nseindia.com/regulations/periodic-call-auction-illiquid-securities
If you are convinced with your research, you can buy them (smaller qty maybe?) but make sure you are aware of the risks esp illiquidity and delisting in case things go completely wrong.
That is really well put up @Meher_Smaran. I will definitely reconsider and thanks for all the inputs
This is the one issue in Zerodha , many of the good stocks , just because of their low price , not being allowed to buy , even if you know the risk and investing your money 