To improve market integrity and protect investors’ interests, the Securities and Exchange Board of India (SEBI) and exchanges have introduced various improved well-before surveillance measures such as price band reduction, periodic call auction, and transfer of shares to the Trade for Trade segment from now and then.
Following discussions in joint surveillance meetings, SEBI and Exchanges have decided that, in addition to the measures above, ASM on securities with surveillance concerns based on objective parameters such as price/volume variation, volatility, and so on will be implemented.
In general, ASM means to control the stock market’s highly volatile securities. It serves as a speculative trading control measure to safeguard the interests of retail investors and keep them out of dangerous trading situations.
What is ASM in the Indian Stock Market?
The Additional Surveillance Measure (ASM) was established in 2018 by SEBI and recognized stock exchanges to control the incredibly volatile stocks on the Indian stock market. It serves as a speculative trading control measure to safeguard the interests of retail investors and keep them out of dangerous trading situations.
ASM means the Abbreviated Settlement Cycle which is the process of settling trades within a shorter time frame than the T+2 settlement cycle. ASM is available for specific securities traded on the NSE.
What are the Different Types of ASM?
Long-term ASM and Short-term ASM are the two primary types of ASM. Stocks are further divided based on specified criteria, which we shall examine in the next section for the two, just as they are included in the ASM list according to predetermined metrics.
Below are some parameters that will be used for the Long Term ASM Framework’s shortlisting of stocks.
- High-Low Price Variation
- Close-to-Close Price Variation
- Volume Variation
The stocks here include 2 phases. They are given the phases on this list depending on whether the following requirements are met.
- Stage 1
The first opportunity for explanation will be offered to the stocks assigned to this category. For these stocks, the appropriate margin rate will be either 40% or 1.5 times the current margin, whichever is higher. 100% is the maximum permitted margin.
- Stage 2
The appropriate margin rate for the stocks added at this point will be 2.5 times the current margin or 80%, whichever is higher. The margin can never exceed 100%.
Note that there are exceptions on this list. PSUs, stocks included in the trade-to-trade section and securities with derivatives cannot be included on the ASM list.
Significance of ASM Listed Stocks
Additional Surveillance Measure (ASM) listed stocks are typically volatile and may be subject to sudden price movements. As a result, investors in ASM stocks need to be aware of the risks involved and should approach these investments with caution.
ASM should not be interpreted as a measure against the company when it is imposed on stocks. Investors must understand that ASM only applies to stocks for monitoring reasons.
List of ASM Stocks
The largest privately owned thermal power producer in India is Adani Power Limited (APL), a part of the wide-ranging Adani Group.
Adani Power Ltd is one of the ASM listed stocks in the Indian Stock Market. This move will likely widen the company’s investor base and provide it with a better platform for raising funds.
One of the top cement manufacturers in India is Ambuja Cements Ltd. It’s a part of the Adani Group, which has the world’s biggest and fastest-growing profile of sustainable solutions. As of October 10, 2022, Ambuja Cements Ltd. is trading on Short Term stage 1 of the BSE ASM list.
Jindal Worldwide Limited
Jindal Worldwide Limited, a leading player in the Indian stainless steel industry, has been listed on the ASM stock exchange. This listing will enable the company to raise funds for its expansion plans and provide liquidity to its shareholders. The listing will also help the company to enhance its corporate image and visibility.
Liberty Shoes Limited
Liberty Shoes Limited (LSL) is a leading manufacturer and retailer of footwear in India. The company has a strong presence in the organised retail sector, with over 1,000 stores nationwide. LSL is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
On January 8, 2020, LSL announced that it had filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for a proposed initial public offering (IPO).
Founded on October 24, 1970, BSL was renamed Bhartiya Udyog Sangh by S M Sureka before being taken over by Jhunjhunwala in 1971. BSL Limited has been listed on the ASM stock exchange.
This is an excellent move for the company, as it will allow them to raise capital and expand its operations. The listing will also give investors a chance to buy shares in the company and participate in its growth.
Additional surveillance measures help protect markets by preventing market manipulation and separating novice investors from high-risk stocks. Additionally, it serves as a means of advising investors to perform their due diligence before purchasing ASM list stocks.
Disclaimer: The provided information is solely for educational purposes. Investments in the stock market are prone to risk; before investing, thoroughly read all relevant documents or consult an expert.