The Securities and Exchange Board of India (SEBI) introduced the Additional Surveillance Measure (ASM) and Graded Surveillance Measure (GSM) frameworks to protect retail investors from excessive speculation in volatile small-cap and micro-cap stocks. Understanding these mechanisms is critical before investing in any stock priced below ₹500.
What is ASM (Additional Surveillance Measure)?
ASM is triggered when a stock exhibits unusual price or volume patterns — specifically when it rises or falls more than 35% in a short period without corresponding changes in fundamentals. Stocks placed under ASM face increased margin requirements (typically 100% of trade value upfront), which significantly curtails speculative activity.
Key criteria for ASM inclusion include: high price-to-earnings divergence, significant price movement relative to the broader index, high price-earnings multiple, low market capitalisation, and lack of institutional participation. SEBI jointly reviews ASM lists with NSE and BSE on a quarterly basis.
What is GSM (Graded Surveillance Measure)?
GSM is a graduated framework targeting stocks with weak fundamentals, poor price discovery, and potential operator activity. Unlike ASM which focuses on price behaviour, GSM also considers business fundamentals. GSM has six stages (Stage I through Stage VI), each progressively more restrictive:
- Stage I: 100% upfront margin
- Stage II: Trade-to-trade settlement begins
- Stage III–V: Additional restrictions on entry
- Stage VI: Periodic call or put auction mechanism
How to Check if a Stock is Under ASM or GSM
Both NSE and BSE publish updated ASM/GSM lists on their websites. MicroStocks.in automatically flags stocks under any surveillance measure in the Surveillance Dashboard — look for the red "ASM" or "GSM" badge next to any ticker.
Investment Implications
A stock appearing on ASM or GSM is not automatically a bad investment — some genuinely undervalued micro-caps end up here due purely to low liquidity or momentum. However, ASM/GSM listings dramatically reduce liquidity, increase holding costs (via margin), and can create exit traps when the broader market turns risk-off. Always check surveillance status before initiating any position in sub-₹100 stocks.
Key Takeaways
- ASM targets price/volume anomalies; GSM targets fundamental weakness
- Higher margin requirements reduce speculative trading and liquidity
- Stage VI GSM stocks can only be traded during periodic auctions — exit becomes nearly impossible
- SEBI reviews and revises these lists regularly — monitor for changes
- MicroStocks.in Surveillance Panel shows real-time ASM/GSM status for tracked stocks