What risks do investors face when investing in stocks under surveillance?

Stocks placed under surveillance come with higher risk and tighter restrictions. These measures are introduced by regulators to curb excessive volatility or questionable activity, and they can make buying or selling such stocks difficult and costly. They also signal possible underlying issues in the company.

Key risks include:

Liquidity risk:
Trade-to-Trade (T2T): Intraday trading is not allowed. You must take delivery of shares, making quick exits difficult.
Limited trading windows: Some stocks trade only on specific days, reducing exit opportunities.
Low volumes: Fewer buyers and sellers can make it hard to sell without impacting the price.

Trading restrictions and higher costs:
Price bands: Tight limits (such as 5%) restrict sharp moves but can trap investors.
Higher margins: Additional cash margins or surveillance deposits may be required.

Volatility and price risk:
Sharp price swings: Surveillance stocks can see sudden and steep price movements.
Weak fundamentals: Many are flagged due to poor financials, high promoter pledging, or governance concerns.

Operational and exit risks:
Penalties or trading limits: Repeated violations can lead to restrictions on your account.
Delisting risk: In extreme cases, stocks may be delisted or shifted to restricted segments, making exits very difficult.

In short, surveillance stocks are high-risk and generally unsuitable for short-term or speculative trading.