NSE Adds 73 Companies to Long-Term ASM Framework

Stocks of several companies have recently been included in the long-term Additional Surveillance Measure (ASM) framework by the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). This framework is designed to monitor and regulate stocks that exhibit unusual price movements or high volatility, providing additional scrutiny to ensure market stability.

Among the latest entrants are Dixon Technologies (India), Cochin Shipyard, ITI, Piramal Pharma, Godfrey Phillips India, Sagility India Ltd, PG Electroplast, KFin Technologies, JSW Holdings, and 71 others. The inclusion of these stocks highlights ongoing efforts by the market regulators to safeguard investors and maintain transparency in trading activities.

Here is the List of Stocks Under Long Term ASM Frame

What is ASM and How Are Stocks Selected?

The ASM framework was introduced by the Securities and Exchange Board of India (SEBI) to monitor stocks that show unusual market behaviour, ensuring that investors are cautious. Stocks are selected based on several criteria, including:

• Price fluctuations of 200% or more over the past three months
• Concentration of top 25 clients greater than 30%
• Close-to-close price variation of 100% or more in 30 days
• The market capitalisation of more than Rs. 500 crores

These criteria aim to identify stocks that exhibit significant risk due to volatility or manipulation, providing a safer trading environment for investors.

The Impact of ASM on Traders and Investors

For traders, ASM stocks come with strict restrictions. Intraday traders are required to deposit a 100% margin, and the stock price is subject to a 5% circuit filter, meaning price fluctuations are capped to prevent large-scale losses. As a result, trading in these stocks becomes more difficult, with a reduction in liquidity and greater price stability.

For investors, ASM inclusion could signal short-term volatility. Stocks may face negative bias in the market, leading to a potential drop in prices. Long-term investors are less likely to be affected by short-term fluctuations and can continue holding stocks as long as the fundamentals remain strong.

What Should Investors Do?

Investors holding stocks in the ASM list should evaluate the fundamentals of these companies closely. If the company’s financial health remains solid, long-term investors can stay invested despite short-term price fluctuations. However, new investors are advised to avoid entering these stocks, as prices may fall further due to market restrictions. Additionally, stocks in the ASM list cannot be used as collateral, and reduced leverage may lower volumes.

Investors should consult with stock market professionals to determine the best course of action, especially if the company’s fundamentals are weak. In such cases, it may be better to exit the position before further losses occur.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.