INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Leading stock exchanges BSE and NSE have put in place a detailed framework for shortlisting and reviewing of securities under
graded surveillance measures (GSM), wherein investors need to be extra cautious while dealing in such stocks
These additional guidelines have been made after a joint surveillance meeting of markets regulator Sebi with exchanges last week, the
bourses said in separate circulars
Under the new criteria, securities having a networth of less than or equal to Rs 10 crore and net fixed assets of less than or equal to Rs
25 crore are eligible for inclusion under the GSM framework
Also, securities with a negative price earning (PE); or having a greater than two times PE of benchmark index -- Nifty 500 or SP BSE 500
Further, the exchanges said securities with full market capitalisation of less than Rs 25 crore can be directly included under GSM stage I
GSM framework has been made to check any abnormal rise in stock price not commensurate with the company's financial health
The framework has six stages with surveillance action defined for each stage
According to the exchanges, securities placed under GSM framework would be reviewed on quarterly basis and securities not meeting the
inclusion criteria would be moved out of the GSM framework
The bourses said public sector enterprises; securities already under suspension; securities on which derivative products are available;
firms listed during last one year through initial public offer and those which have paid dividend for each of last three preceding years,
will not be included under the framework
In addition, securities listed through scheme of arrangement involving merger or demerger in last one year will not be included
"In case of merger of companies, if any of the securities at time of merger is under the purview of GSM, then the same shall be continued
" If the parent company is under purview of GSM, the resultant demerged companies shall also attract GSM
If the parent firm is not under purview of GSM, the resultant demerged companies shall not be part of GSM at the time of demerger and shall
be considered during the subsequent quarterly review," the exchanges said
Last month too, the exchanges came out with some guidelines in this regard
In June, Sebi had initiated a probe into the alleged leak of 37 companies that were brought under enhanced surveillance before the stock
exchanges made the list public
It was alleged that stocks that were to be included in additional surveillance measure were leaked to market operators before the official
announcement was made by the stock exchanges.
