As per Bombay stock exchange (BSE) website; the stocks shall be classified as illiquid, whether trading in normal market or in trade for trade settlement, if all the following conditions are met:
» The average daily trading volume of a scrip in a quarter is less than 10000
» The average daily number of trades is less than 50 in a quarter
» The scrip is classified as illiquid at all exchanges where it is traded.
It is in the interest of the traders and investors that they should avoid getting struck in illiquid stock as such type of stocks are only settled through Periodic Call Auction Process and one may find that during selling of such a dud stock; one may not get a buyer and thus your hard earned money is struck.