In this blog post we are giving you information about What Is ASM And GSM 6 Stages In Stock Market.
Whenever we place an order for any stock, we should ensure that the stock in which you are going to invest is not under SEBI/Exchange surveillance. The investor should be well aware.
However, nowadays almost every demat account app displays a popup message that the stock in which you are investing is placed under SEBI/Exchange supervision and before placing orders on such securities Will ask for your permission. Your order becomes final only after approval by you.
What Is Full Form of ASM ?
Full form of ASM is Additional surveillance measures. This step is an initiative taken by SEBI and stock exchanges to protect the interests of investors and the market and to enhance market integrity.
Shares are categorized as ASM based on certain terms found in the NSE . Under ASM the stock is divided into two parts, i.e. long term ASM and short term ASM. If you want to see the list of stocks under ASM category you can visit the website nseindia.com/reports/asm.
Is it Good to Buy ASM-Listed Stock ?
Importance of ASM List for Investors As an investor, it is extremely important that you keep track of the main fluctuations to make the best investment decisions. ASM rules serve that purpose.
These are also subject to a circuit filter of 5%. The share price of a stock listed on ASM cannot fluctuate more than 5%. The traders’ profit or loss is therefore limited. Also, the price of the stock is stable. This is in the best interest of retail investors who are long-term.
The actions of the company that benefit the investors will not be affected by the addition to the ASM. Dividends, bonuses, and stock splits continue to be offered as normal.
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What Happens When Stock is on ASM List ?
Can I Sell ASM GSM Stock ?
Margin trading is not permitted due to restrictions on speculative trading of such shares. The result is that you will not be allowed to trade intraday on stocks classified under ASM.
Once a stock is entered inside the GSM, it is placed into one of six stages, where restrictions increase or decrease with each stage.
The incidence or increase of restrictions depends on the performance of the stock and the decision of SEBI.
What Is ASM And GSM 6 Stages In Stock Market
There are six stages in the GSM framework. There are six stages in the GSM framework: Stages I through VI. Each stage has a defined surveillance action.
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What Happens in ASM Stage 1 ?
The surveillance actions applicable for the shortlisted securities are as under:
Stage I
a) Securities shall be placed under Price Band of 5% or lower as applicable.
b) VAR Margins shall be levied at the rate of 100%
What Happens in ASM Stage 2 ?
Stage II
The shortlisted securities shall be further monitored on a pre-determined objective criteria
and would be moved into Trade for Trade settlement once the criteria gets satisfied.
What Happens in ASM Stage 3 ?
The close-to-close price change for the past 365 days must be greater or equal to (100%+ Beta of the stock X Nifty 50 variation).
The High-Low price variation for three months must be greater or equal to (150% + beta of the stock X Nifty50 Variation).
The criteria have two additional clauses: the market cap of the company must be more than Rs 500 billion. The top 25 clients’ concentration must also be higher than or equal 30% of the combined trading volume of NSE and BSE over the past 30 days.
What Happens in ASM Stage 4 ?
To meet this criteria, the average daily trading volume must be at least 10000 shares per month and more than 500% the volume averaged over the past 3 months on BSE and NSE.
At the same time, the top 25 clients’ concentration must be higher than or equal 30% of the combined trading volume of NSE/BSE during the previous 30 days.
There are also a few other criteria. The average delivery % in the past 3 months is higher than 50% and the market cap of the company exceeds Rs 500 crores.
Also, the Close-to-Close Price Variation for the past 1 month is more than (50 % + Beta of stock X Nifty50 variation).
What Happens in ASM Stage 5 ?
Market stability and investor protection are maintained by constant monitoring and making adjustments when necessary.
More details given in this pdf file which is provided by NSE India (Click Here to See)
What Happens in ASM Stage 6 ?
A new uptrend begins as prices start to rise again, attracting a new wave of investors.
What Are The Conditions For Companies to Withdraw From The GSM List?
SEBI will review companies twice a year and decide whether they should be in GSM or not. A quarterly review is also carried out where companies may be moved from one GSM to another.
Companies have the right to appeal SEBI’s decisions in the Securities Appellate Tribunal (SAT) or high courts.
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What happens if stock is on the ASM list
ASM is designed to serve this purpose. Stocks on the ASM list are subject to more stringent regulations These stocks cannot be pledged, and they also do not have intraday leverages like cover orders, bracket orders, etc. The regulation point here is that 100% of the value of these stocks are blocked as margins.
Is Buying ASM Listed Stock a Wise Investment Choice ?
ASM is designed to serve this purpose. Stocks on the ASM list are subject to more stringent regulations These stocks cannot be pledged, and they also do not have intraday leverages like cover orders, bracket orders, etc. The regulation point here is that 100% of the value of these stocks are blocked as margins.
Can I sell ASM GSM stock ?
If a client has a GSM stock stage 2 or higher in their account, they can still sell that stock.
Can I sell ASM Stage 1 stock ?
The sale shall be regarded as a normal sale through demat.
How long does a stock stay on the ASM list for?
Stocks that have completed 60 calendar days of long-term ASM Framework are eligible to exit the framework, subject to a staged exit. Stocks that do not meet the entry criteria for long-term ASM.
What is the difference between ASM Stage 1 and 2 ?
The following actions are taken during the first stage of ASM: Margin of 100 % b. Price band daily of at least 5%. When the security is transferred to the trade-to-trade settlement, the settlement will be done on a gross basis. Delivery based
How often are ASM and GSM measures updated ?
The frequency of updates depends on market conditions, with exchanges adjusting these measures as needed to ensure effective surveillance.
Can individual investors use ASM and GSM for their benefit?
While these measures are primarily regulatory tools, understanding them can help investors make more informed decisions.
Disclaimer:
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities are quoted as an example and not as a recommendation. This content is purely for information purpose only and in no way to be considered as an advice or recommendation.
