What are ASM and GSM categories?
ASM (Additional Surveillance Measure) and GSM (Graded Surveillance Measure) are regulatory mechanisms by stock exchanges to monitor and control excessive price volatility and safeguard investors from risky stocks.
Why is a stock placed under ASM?
- Unusual price movements (e.g., 150%+ rise in 3 months)
- Sharp increase in trading volumes
- Concentration of trades among a few clients
What are the implications of ASM tagging?
- Intraday trading is disabled
- 100% upfront margin requirement
- Tighter circuit limits (±5%)
- Trade-to-trade settlement in later stages
What are the types of ASM?
There are two types: Long-term ASM (for sustained volatility) and Short-term ASM (for sudden swings).
Can you provide an example of ASM tagging?
Yes. 4THDIM was moved to ASM due to a 200% price spike and abnormal volumes.
How and when does a stock exit ASM?
Stocks are reviewed weekly. They may exit if the risk indicators improve or after 90 trading days.
What is the GSM category?
GSM is applied to companies with weak financials or questionable fundamentals to alert and protect investors.
What are the criteria for GSM tagging?
- Low net worth or small fixed assets
- Negative or very high P/E ratios
- Abnormal price-to-book values
How does GSM classification work?
It has multiple stages:
- Stage I: 100% margin + price band
- Stage II: Trade-to-trade + 50% deposit
- Stage III–IV: Weekly trading + deposit + no upward movement allowed
What other special categories exist?
- SME Segment: Small & Medium Enterprise stocks
- Trade-to-Trade (T2T): Delivery-based trading only
- Illiquid Securities: Very low daily trading turnover
What precautions should investors take?
- Avoid leverage or margin trading on such stocks
- Check NSE/BSE announcements regularly
- Use stop-loss and limit orders
- Assess fundamentals and risk before investing
- Be prepared for restricted trading exits
Is investing in ASM/GSM stocks always risky?
Not necessarily. ASM may be a temporary move for high-momentum stocks. However, GSM tagging often indicates poor fundamentals.
Final takeaway?
ASM and GSM are regulatory tools to ensure transparency and protect retail investors. Understand their impact before taking any investment decisions.
