ASM and GSM Surveillance Framework: What It Means When Your Stock Is Shortlisted on NSE

The ASM GSM surveillance framework is how NSE and BSE, working with SEBI, flag stocks whose trading or valuation looks off. Own or trade one of those names and your broker may suddenly hike margin, the price band may shrink, and in the tougher stages you might get only one trading day a week. Below we walk through what Additional Surveillance Measure (ASM) and Graded Surveillance Measure (GSM) actually mean, how stocks get shortlisted, what each stage does to your order, a worked example of the cash you would need, and how names move back out.

For day-to-day market context, keep our Stock Market Today India hub handy. Surveillance stages often travel with tighter price bands, so our explainer on price bands and circuit limits on NSE is useful background.

What the ASM GSM surveillance framework is meant to do

NSE’s own note says SEBI and the exchanges have, over time, layered on pre-emptive steps such as narrower price bands, periodic call auctions and shifting securities into the Trade for Trade segment. ASM and GSM sat on top of those after joint surveillance meetings. The stated aims are straightforward: alert investors to be extra careful in these securities, and push market participants to do their due diligence.

The two frameworks look at different things:

• ASM targets securities with surveillance concerns based on objective market parameters. NSE’s ASM page lists them as high-low variation, client concentration, close-to-close price variation, market capitalisation, volume variation, delivery percentage, number of unique PANs and PE.
• GSM targets securities whose price is not commensurate with financial health and fundamentals such as earnings, book value, fixed assets, net worth, the P/E multiple and market capitalisation, as NSE’s GSM page puts it.

One line the exchanges repeat in almost every notice: according to NSE’s ASM FAQ, shortlisting under ASM is purely on account of market surveillance and should not be read as an adverse action against the company. Think of it as a warning label on trading conditions, not a finding of wrongdoing.

ASM asks whether the trading in a stock looks unusual. GSM asks whether the price looks out of line with the company’s fundamentals. Both change what it costs you to trade.

Long-term ASM: entry criteria and the four stages

NSE’s FAQ dates the ASM framework to March 26, 2018. It now has a long-term and a short-term version. Long-term ASM uses seven criteria for non-derivative stocks. Most pair a large price move — measured against the stock’s beta times the Nifty 50’s move — with a check on whether a small group of traders dominates volume. A few examples from the FAQ:

• Close-to-close price variation over the last 60 trading days greater than 100% plus beta times the Nifty 50 variation, and the top 25 clients accounting for at least 25% of combined NSE and BSE volume in the last 30 days, and market capitalisation above ₹100 crore.
• A month in which average daily volume is at least 10,000 shares and monthly volume variation exceeds 500% of the preceding three months’ average daily volume, combined with top-25 client concentration of at least 25%, average delivery below 50% over three months, market capitalisation above ₹500 crore and a one-month price move of at least 50% plus beta times the Nifty 50 variation.
• For stocks under ₹500 crore market capitalisation, a monthly price move above 25% plus beta times the Nifty 50 variation together with a negative PE or a PE more than twice the Nifty 50’s.

The FAQ notes that the beta factor applies only when the index variation is positive, and that stocks already under GSM or already in Trade for Trade are kept out of long-term ASM shortlisting.

Once a stock is in, it can climb through four stages. Each step up needs the stock to already sit in the previous stage and, over five consecutive trading days, show a close-to-close variation of at least 25% plus beta times the Nifty 50 variation with top-25 client concentration of at least 30%:

The FAQ also has a fast track. Criterion 7 covers stocks already in a ±10%, ±5% or ±2% band that rose at least 200% plus beta times the Nifty 50 variation on a close-to-close basis over 365 days, with a high-low variation of at least 300% plus beta times the Nifty variation, market capitalisation above ₹1,000 crore and top-25 client concentration of at least 25%. These jump straight to Stage IV from the beginning of T+3 days and stay there for at least 90 calendar days.

What changes for F&O stocks

Since an NSE circular of August 9, 2024, long-term ASM also covers stocks with futures and options. For these, Stage I means margin of 50% or existing total margin, whichever is higher, on F&O contracts and 100% on the underlying shares. Stage II cuts the market-wide position limit (MWPL) to 75% of the applicable limit, Stage III to 50%, and at Stage IV no fresh contracts are issued from T+1 day. After the existing contracts expire, the underlying moves to gross settlement with a ±5% price band.

The FAQ’s own illustration shows why this bites. With an MWPL of 1,000 and open interest of 650, utilisation is 65%. Cut the limit to 75% (750) and utilisation becomes 86.67%. Cut it to 50% (500) and utilisation becomes 130%, which the FAQ flags as going into the F&O ban.

Short-term ASM: a lighter, faster filter

Short-term ASM reacts to sharp moves over days rather than months. For mainboard stocks, Stage I is triggered by, among other tests, a close-to-close move of at least ±25% plus beta times the Nifty 50 variation in 5 trading days, or at least ±40% plus beta times the Nifty variation in 15 trading days, each paired with top-25 client concentration of at least 30% over the same period. NSE’s FAQ lists the actions:

• Stage I: margin of 50% or the existing margin, whichever is higher, capped at 100%. The exchange also seeks a clarification from the company about any undisclosed announcement and shows the stock on a surveillance dashboard.
• Stage II: margin of 100% or the existing margin, whichever is higher, capped at 100%.

Stocks stay in each short-term stage for at least 5 or 15 trading days, depending on the criterion that caught them, and become eligible for review from the 6th or 16th trading day. If a stock no longer meets the entry criteria on the review date, it moves out. If it graduates to long-term ASM, the short-term rules stop applying to it.

GSM: when price runs ahead of fundamentals

GSM can be the tougher framework for retail traders because its higher stages restrict when you can trade at all. NSE’s GSM page sets out two main criteria for mainboard securities:

• Criteria I: net worth of ₹10 crore or less, and net fixed assets of ₹25 crore or less, and a PE more than twice the Nifty 500’s PE or a negative PE.
• Criteria II: full market capitalisation below ₹25 crore and a PE more than twice the Nifty 500’s, or, for negative-PE stocks, a price-to-book above twice the Nifty 500’s or a negative price-to-book.

SME stocks have lower thresholds (net worth of ₹5 crore or less, net fixed assets of ₹10 crore or less, market capitalisation below ₹10 crore). Several groups are excluded altogether, including stocks with derivatives, members of the Nifty 500 or BSE 500, suspended securities and companies listed through an IPO in the last year. NSE says identification and review happen quarterly, based on the latest quarterly results for mainboard companies and half-yearly results for SME companies. Its tentative schedule shows the circular for the quarter ended September 2026 due on December 4, 2026.

The stage-wise actions are the same on both exchanges:

NSE adds that ASD must be paid only in cash and is retained till further notice. A recent BSE notice dated October 16, 2026 moving a batch of securities to higher GSM stages from October 19, 2026 repeats the same table and warns members that settlement in these stocks is on a trade-to-trade basis with no netting off allowed. In practice, that means you cannot buy and sell the same stock within the day to square off; every trade settles on its own.

At GSM Stage III, buying ₹1 lakh of a stock ties up roughly ₹2 lakh of cash, because the 100% Additional Surveillance Deposit sits on top of the full purchase price.

Worked example: how much cash each stage ties up

Suppose you want to buy ₹1,00,000 worth of a small-cap stock. The figures below are hypothetical and assume, for illustration only, that the stock’s normal margin with your broker is 20%. Actual margins vary by stock and broker.

The jump from ₹20,000 to ₹2,00,000 is the real sting of surveillance for a trader: leverage disappears, intraday square-off is no longer possible in Trade for Trade stocks, and the ASD is cash you cannot deploy elsewhere until the exchange releases it.

Example of an ASM entry test

Now take a hypothetical stock with a beta of 1.2 in a period when the Nifty 50 rose 5% over 60 trading days. Under the 60-day long-term ASM criterion, the price-move threshold is 100% + (1.2 × 5%) = 106%. If the stock rose 120% over those 60 trading days, it crosses the price test. It is shortlisted only if the other two conditions also hold: the top 25 clients account for at least 25% of combined NSE and BSE volume in the last 30 days, and market capitalisation exceeds ₹100 crore. Had the Nifty 50 fallen instead, the beta adjustment would not apply and the threshold would stay at 100%.

How to check whether your stock is under surveillance

• Exchange lists: NSE publishes the list of securities shortlisted under ASM and under GSM on its ASM and GSM regulation pages, and BSE publishes GSM stage changes as notices.
• Order-entry alerts: NSE’s FAQ says an alert message appears on its NEAT/NEAT+ trading terminals when an order is placed in a security under GSM, ASM, ESM or the insolvency framework, and it assigns each stage a surveillance indicator code (for example, 13 to 16 for long-term ASM Stages I to IV and 11 and 12 for short-term ASM Stages I and II).
• Timing of notices: the FAQ says the exchange typically issues the relevant notice after market hours, one trading day before the effective date. Checking circulars in the evening helps you avoid a surprise margin call the next morning.
• Delivery and volume data: because delivery percentage and client concentration feed into ASM, our guide on how to read NSE bhavcopy shows where to see the daily delivery figures yourself.

How stocks exit ASM and GSM

For long-term ASM, NSE’s FAQ says securities that complete 90 calendar days in the framework become eligible for exit, stage by stage, with reviews carried out weekly. A Stage IV stock that no longer meets the Stage IV criteria moves to Stage III, then to Stage II and Stage I, and leaves the framework from Stage I once it no longer meets the entry criteria. For GSM, NSE says securities that no longer meet Criteria I and II at the quarterly review are moved out of the framework.

What it means for retail investors

Being shortlisted does not mean a company has done anything wrong, and the exchanges say so explicitly. It does mean three things for you. Your cost of holding or trading the stock rises, sometimes sharply. Liquidity can thin out because fewer traders want to post 100% margin or a cash deposit. And at GSM Stage III or IV, you may only get one trading day a week to exit. If a stock you hold enters a surveillance stage, check the latest circular for the exact action and effective date, look at the company’s fundamentals and recent disclosures, and size your position on the assumption that you may not be able to sell quickly. Our risk management in trading guide covers position sizing for situations like this.

Frequently asked questions

Is a stock in ASM a bad stock?

Not necessarily. NSE’s FAQ states that shortlisting under ASM is purely a market surveillance step and should not be read as an adverse action against the company. It reflects how the stock has been trading, not a verdict on the business.

Can I do intraday trades in a GSM stock?

From GSM Stage II onwards the stock trades in Trade for Trade, where BSE’s notice says settlement is trade-to-trade with no netting off. That rules out the usual buy-and-sell-the-same-day square-off. At Stage I there is no Trade for Trade requirement, but margin is 100%.

Does ASM apply on top of other restrictions?

Yes. NSE’s FAQ says ASM works in addition to existing exchange actions, and that if a stock meets several surveillance frameworks, the stricter action applies.

Who sets these rules?

The criteria are jointly decided by SEBI and the exchanges in joint surveillance meetings, and NSE notes that they are dynamic and can change from time to time. Always check the latest circular rather than relying on an older summary.

This article is for education only and is not investment advice. The worked examples use hypothetical prices, margins and index moves. Surveillance criteria, stage actions and stock lists change from time to time; check the latest NSE and BSE circulars and your broker’s margin policy before trading. Consult a SEBI-registered adviser before making investment decisions.