Shares of firms outside ASM list rally

Shares of companies that were excluded from the so-called additional surveillance measure (ASM) list rallied on Thursday. Nine out of 13 stocks on which exchanges removed trading restrictions ended with gains despite overall weakness in the market. Shares of Venky's (India) skyrocketed 20 per cent, while that of Tinplate Company of India, Crescent Leasing and Dilip Buildcon gained between seven per cent and 16 per cent.

Investors have to provide 100 per cent margin while dealing in these stocks. Also, the stocks are subject to a five per cent limit on the share price movement. The stocks are reviewed twice a month to determine if they are in a position to exit the mechanism. The list of companies under ASM is updated on a regular basis by BSE and NSE.

Shares of several companies put in the ASM list had tumbled amid unwinding of speculative positions. More than 75 per cent of the 109 stocks put under the initial ASM list had seen erosion in stock price in the six weeks after June 1 (day of applicability), showed an earlier analysis by Business Standard. Nearly a third of these stocks had tumbled more than 25 per cent.

"Investors, as well as traders, turn risk-averse towards stocks put in the ASM list. Therefore, there was a relief rally in shares of companies that were removed from the list. The market has started viewing stocks in the ASM list with suspicion," said a broker.

Exchange officials said the ASM list is to curb speculation and is not a penal action.

"It may be noted that the shortlist of securities under ASM is purely on account of market surveillance and should not be construed as adverse action against the concerned company," says an exchange notification.

Exchanges look at parameters such as the number of times the price band was hit, close-toclose price variation, price to earnings (P/E) ratio, and highlow price variation.