ASM List Stocks in India: Significance to Investors Last updated:-IND Money

 This was publised on Nov 30 2023 by IND money

It is not a hidden fact that the Indian Stock Market is subject to high volatility. And while checking on the past trends, we have not only been witnessing a streamlined high-fall situation but also have been subject to some massive market manipulation and scams.

Yet, the stock market remains to be one of the most appealing places for investment, especially for retail investors. For this reason, it becomes crucial for the Securities Board Exchange of India (SEBI) to establish pre-emptive measures to protect the integrity of the 

market. Though, to curb the trading difficulties, SEBI  has introduced some highly regulated surveillance measures, one of which is the Additional Surveillance Measure (ASM). 

What are ASM and ASM List in the Share Market?

Additional Surveillance Measure or ASM was introduced in 2018 as a regulatory initiative by SEBI and recognised stock exchanges to monitor the highly volatile stocks in the Indian stock market. It serves as a control speculative trading measure to safeguard the interest of retail investors and protect them from adverse trading situations. 

The ASM List stocks are those securities that are currently under surveillance owing to their price variation, volume variation, and their volatility. The objective to put these stocks on an ASM list is to make the investors cautious and to alert them while dealing with such stocks.

However, it is to note that the intention of an ASM framework is purely for the reasons of market surveillance and not to be construed as an action against the company. 

Criteria to Determine ASM List Stocks

The following parameters have been used as a criterion by SEBI and stock exchanges to shortlist ASM List stocks:

• Close to Close Price Variation
• Client Concentration
• Delivery Percentage
• High Low Variation
• Market Capitalization
• No. of Unique PANs
• Price Earning Ratio (PE)
• Volume Variation

Significance of ASM list for the Investors

As an investor, it is of utmost importance that one keeps an eye on the major fluctuations to make the best investment decision. ASM serves that purpose. 

A stock under the ASM list is subject to stricter regulations. They cannot be pledged and also are denied the intraday leverages such as cover order, bracket order, etc. Here, the regulation point is established as 100% of the traded value of such stocks gets blocked as margins. Also, these are subject to a 5% circuit filter. This means that the share price of an ASM-listed stock is not to fluctuate by more than 5%. This limits the profit or loss for traders. This also results in stability in the price of the stock. Thus, working best in the interest of long-term retail investors. 

Whatsoever, despite being added to the ASM list, the company's actions benefiting the investors are not affected. Perks like dividends, bonuses and stock splits are carried out as usual. 

Conditions For Adding Stocks Under ASM List

The following are the conditions based on which the stock is put under an ASM list:

If, 

• In the previous 3 months, there was a price fluctuation of  around 150% or more (based on corporate action adjusted prices) AND a minimum 25% concentration of the top 25 clients in the last 30 days AND market capitalization is greater than 100 crores on the review date

OR

• In the last 60 trading days, there was a  Close–to–Close Price Variation (based on corporate action adjusted prices) of a minimum of 100% AND in the last 30 days the concentration of Top 25 clients account is a minimum of 30% of the combined trading volume of BSE & NSE in the stock 

OR

• In 365 days if there was a Close–to–Close Price Variation (based on corporate action adjusted prices) of a minimum of 100%  AND the high–low Price Variation (based on corporate action adjusted prices) was a minimum of 200% + (Beta (β) of the stock * Nifty 50 variation) AND Market Capitalization is more than Rs.500 Crore as of the review date AND in the last 30 days, the concentration of Top 25 clients account was a minimum 30% of the combined trading volume of BSE & NSE in the stock 

OR

• The average daily volume in a month is a minimum of 10,000 shares & more than 500% of the Average volume in the preceding 3 months at both exchanges (BSE & NSE) AND in the last 30 days, the concentration of Top 25 clients accounts for a minimum of 30% of the combined trading volume of BSE & NSE in the stock. AND in the last 3 months, the average delivery % is more than 50%  AND the market capitalisation is more than Rs.500 Crore as of the review date AND in last month, the close–to–close price variation (based on corporate action adjusted prices) is more than (50% + Beta (β) of the stock * Nifty 50 variation).

However, the following securities are to 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

Stagewise Surveillance Action

After entering into the ASM list, the stocks are categorized into 4 stages and accordingly actions are taken on the same. The actions can be summarized in the below table:

STAGE	ACTION
Stage I	The applicable margin for all clients will be 80% from T+3 days
Stage II	Reduction of price band to next lower level and applicable margin for all clients. will be 100% from T+3 day
Stage III	Further reduction of price band to next lower level and applicable margin shall be 100% from T+3 day for all clients.
Stage IV	Settlement is on a Gross basis with 100% margin on all clients and 5% price band.

Exiting the ASM List

Securities which have completed 90 trading days in the long-term ASM shall be liable to exit the list. Also, the stage review shall be done weekly.