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The Indian stock market is prone to significant volatility, which is not a secret. And looking at historical patterns, we can see that in addition to a smooth high-fall condition, there has also been several factors at play:
- Significant market manipulations
- Fraudulent Activities
However, one of the most alluring areas to invest stays the stock market, particularly for small-scale investors. The Securities Board Exchange of India (SEBI) must do two things:
- Develop preventative actions
- Safeguard the market’s stability
However, SEBI has implemented various strictly controlled monitoring methods, among which is the Additional Surveillance Measure, to combat the trading issues (ASM).
In this blog, we are going to be looking at ASM list stocks in India and their significance to investors.
Meaning of ASM and ASM List in the Share Market
In order to regulate the volatile equities on the Indian stock market, SEBI and recognized stock exchanges established the Additional Surveillance Measure, or ASM, in 2018. It works as a speculative investment regulation device to protect retail investors’ interests and shield them from risky trading circumstances.
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Companies on the ASM List are the ones that are constantly being watched due to a variety of reasons like:
- Price variance
- Volume variability
The purpose of including these companies on an ASM list is to warn and caution investors when trading in these stocks.
It is important to remember that an ASM framework’s sole purpose is:
- Market monitoring
- Market Surveillance
It should not be seen as an attack on the companies themselves.
ASM List Stocks Determination Criteria
SEBI and stock exchanges have utilized various criteria as a shortlisting rule for the stocks on the ASM List:
- Close to Close Price Variation
- Client Concentration
- Delivery Percentage
- High Low Variation
- Market Capitalization
- No. of Unique PANs
- Price Earning Ratio (PE)
- Volume Variation
The importance of the ASM list for investor
In order to achieve the best investing choices, it is crucial for investors to maintain an eye on the significant movements. ASM fulfills that function. A stock that is included on the ASM list is governed by stringent rules:
- They are unable to be pledged
- Intraday leverages like cover orders and bracket orders are forbidden
- Here, the regulatory point is set since margins are banned at 100% of the trading value
- These are further susceptible to a 5% circuit filter.
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This signifies that a business listed on the ASM market may not have more than 5% price fluctuations. As a result, traders’ profit or loss is constrained. The stock price remains stable as a consequence of this. It works best for longer-term retail investors as a result.
The company’s policies that benefited the investors are unaffected despite being included to the ASM list. Benefits that are included include:
- Stock splits
The prerequisites for putting stocks to the ASM list
The following criteria determine whether a stock is included to an ASM list:
- Price variation of at least 150% over the preceding three months (based on corporate action adjusted pricing) AND
- At least 25% concentrations of the top 25 clients over the preceding thirty days AND
- The market capitalization of at least 100 crores on the review date, OR
- A Close-to-Close Price Variation (based on corporate activity corrected pricing) of at least 100% occurred in the past 60 trading days, and
- In the most recent 30 days, the Top 25 Clients’ Accounts accounted for at least 30% of the stock’s total BSE & NSE trading volumes.
- The accumulation of the top 25 clients accounts for at least 30% of the total trading activity of the stocks on the BSE and NSE in the previous 30 days.
- The daily average volume in a month is at least 10,000 shares and exceeds 500% of the daily average in the previous three months at both transactions (BSE & NSE).
- The market capitalization as of the review date is greater than Rs. 500 crore
- The average delivery percentage over the last three months is greater than 50%, and the close-to-close price variation over the past month was greater than 50% + beta () of the stock * Nifty 50 variance.
Securities excluded under the ASM list
The following securities are to be excluded to be shortlisted under ASM List:
- Public Sector Enterprises and Public Sector Banks (PSU)
- Securities on which derivative products are available
- Securities already under Graded Surveillance Measure (GSM)
- Securities already under Trade for Trade
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10 ASM List Stocks in India
The current ASM List includes the following 10 stocks as per NSE. Investors are suggested to be extra cautious while dealing with such high volatile stocks:
|Company Name||ASM Stage||Buyer Demand||Current Price (Rs)||Price Change (%)|
|Adani Power||Stage 1||B+||270.5||-0.88|
|Adani Wilmar||Stage IV||A+||594.00||-0.74|
|Brightcom Group||Stage 1||E||31.45||-4.98|
|Jindal Worldwide||Stage IV||B-||237.90||-2.54|
|Gravita India||Stage III||C||284.40||4.98|
|GokulAgro Resources||Stage II||C+||99.00||4.98|
|Future Enterprise||Stage 1||E||3.05||3.39|
|Agro Phos India||Stage II||B-||14.30||-4.35|
Investors should be informed that a stock’s inclusion on the ASM list doesn’t really render it vulnerable to sanctions. In order to protect investors and advise them to use caution while interacting with the companies on the ASM list, this system controls price movement. These surveillance methods help protect markets by preventing price manipulation and protecting novice investors from high-risk stocks.