I am having a hierarchy of directories and inside every directory there is one 'test/' directory which has all the test files. nosetests is not able to collect these test files somehow. 
I have followed naming convention used for filenames and class names as well. All the classes defined in those files are subclass of unittest:TestCase. Still no luck. What must be the problem ?
I am only answering my question. It is really very strange. I found that the test files previously were in executable mode. And as soon as i changed there modes, it started working like a charm. :-) chmod -x *_test.py worked for me. Can anybody explain this behaviour of nosetests ???
'nosetests' was unable to collect test files from directory