Adani Enterprises, Adani Port, Ambuja Cement under ASM framework on NSE

This means that even intraday trading will require 100% upfront margin and this will curb a lot of speculation and short selling.

The stock exchange’s move comes after shares of billionaire Gautam Adani’s group companies fell following a scathing report by US-based short-seller Hindenburg Research.

Adani Group’s market loss crossed $100 billion today, a day after its flagship company abandoned its $2.5 billion stock offering.

Explaining the measure, NSE said, “There will be additional monitoring measures (ASMs) on securities with monitoring concerns based on objective parameters. Price/volume variation, volatility etc.”

Stocks in the ASM list: What does it mean for investors?

Any stock included in the ASM list will be subject to more stringent regulations. They cannot be pledged and are prohibited from intraday leverage such as cover orders and bracket orders, among others.

Five days after a stock is added to the list, it is subject to 100% margin.

This restriction effectively makes margin trading impossible. This is due to the fact that margin trading often enables traders to buy or sell a stock at a discount of between 35 and 40 percent to the original price of the stock.

These stocks are susceptible to 5% circuit filters. This implies that a stock listed on the ASM market cannot have a share price volatility of more than 5%. As a result, the trader’s profit or loss is constrained. Due to this the share price remains stable. As a result working best for long term retail investors.

Despite being included in the ASM list, the actions of the company that benefit investors remain unaffected. Standard procedures are followed for benefits such as dividends, bonuses and stock splits.

In order to regulate highly volatile equities in the Indian stock market, SEBI and recognized stock exchanges instituted Additional Supervisory Measures (ASM) in 2018. It works as a speculative trading control measure to protect the interests of retail investors and protect them from risky trading situations. ,

The ASM list is a list of securities which are currently being monitored due to factors such as price volatility, volatility, volume variation etc. Stocks selected for inclusion in the ASM list serve as a warning to investors about unusual price fluctuations. There are certain trading restrictions on these shares to eliminate any possible speculation.