Under the new norms issued by SEBI vide Circular CIR/MRD/DP/38/2013 dated December 19, 2013 and as implemented by BSE vide notice dated 6th January 2014, the revised criteria for the scrips trading in Periodic Call Auction is as follows:
A scrip which trades in the normal market and is not shifted to trade for trade settlement shall be classified as illiquid on a stock exchange if the following conditions are met:
(i) Average daily turnover of less than Rs.2 lakhs calculated for previous two quarters
(ii) The scrip is classified as illiquid at all exchanges where it is traded
Of the scrips identified as per above criteria, scrips which satisfy any of the following conditions shall be excluded.
(i) Scrips with average market capitalization more than Rs.10Cr.
(ii) Scrips where company is paying dividend in at least two out of last three years.
(iii) 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.
Based on the said criteria, BSE has released a list of scrips which qualify for trading in periodic call auction mechanism. This list will be effective from January 13, 2014. There are 458 scrips in the black hole.
Luckily, a couple of dud stocks in my portfolio have escaped the noose. Not that removing them from the dubious distinction of “Periodic Call Auction for illiquid scrips” is going to improve their market value. I am going to dump them as soon as I can find a buyer.
Anyway, check whether your stocks have escaped the gallows or not.