The Long-term Additional Surveillance Measure (LT ASM) is a regulatory framework introduced by SEBI and Indian stock exchanges to monitor and manage risks in stocks that exhibit continuous abnormal trading patterns. This framework is designed to protect investors and enhance market integrity by imposing stricter trading conditions on selected securities for an extended period.
Criteria for Inclusion in LT ASM
Stocks are selected for the Long-term Additional Surveillance Measure (LT ASM) list based on objective criteria jointly defined by SEBI and the exchanges. These criteria include significant price swings (high-low and close-to-close variations over defined periods), abnormal trading volume fluctuations, high client concentration (such as the top 25 clients accounting for a large share of volume), differentiated market capitalization thresholds, low diversity among traders (few unique PANs), low delivery percentage, and extremely high or volatile price-earnings (PE) ratios.
Stages of LT ASM
LT ASM (Long-Term Additional Surveillance Measure) is applied in steps. As a stock moves through each step, trading restrictions become stricter to help control unusual price movements or speculation.
- Stage I: 100% margin requirement from T+3 day; price band may be reduced.
- Stage II: Further reduction in price band; continued 100% margin.
- Stage III: Additional price band reduction; continued 100% margin.
- Stage IV: Settlement on a gross basis (trade-to-trade), 100% margin, and a restrictive price band (e.g., 5%). For derivative stocks, new contracts are not issued, and existing contracts are settled as per expiry.
Here is the list of stocks that have been shortlisted in the Long-Term ASM Framework Stage I:
Hind Rectifiers Ltd
Hind Rectifiers Ltd (HIRECT) is a leader in designing, developing, and manufacturing power electronic equipment and railway transportation systems. With a long legacy and facilities across India, HIRECT caters primarily to the railway sector with products like rectifiers, inverters, and battery chargers. On July 31st, Hind Rectifiers was included in the LT-ASM Framework by the stock exchanges.
Advait Energy Transitions Ltd
Advait Energy Transitions Ltd provides comprehensive solutions for power transmission, substations, and telecommunication infrastructure. The company has diversified into renewable energy, including green hydrogen and solar EPC projects. Advait is known for offering stringing tools, OPGW/ACS wires, insulators, and hydrogen refuelling systems. On July 31st, Advait Energy Transitions was included in the LT-ASM Framework by the stock exchanges.
Garuda Construction and Engineering Ltd.
Garuda Construction and Engineering Limited is an Indian civil construction company specializing in a wide range of projects, including residential, commercial, industrial, and infrastructure sectors. The company offers comprehensive services covering the entire construction lifecycle, including project planning, resource mobilization, detailed engineering, and execution. On July 31st, Garuda Construction and Engineering was included in the LT-ASM Framework by the stock exchanges.
Hilltone Software & Gases Ltd
Hilltone Software & Gases Limited is an Indian company primarily involved in the production and marketing of industrial and medical gases, particularly oxygen. The company has a manufacturing plant in Santej, Gujarat, equipped with advanced technology for ensuring high-quality medical oxygen production with in-house quality control. On July 31st, Hilltone Software & Gases was included in the LT-ASM Framework by the stock exchanges.
Criteria for Exclusion from LT ASM
A stock may be considered for exit from the LT ASM framework if it no longer meets the inclusion criteria. The process is as follows:
- Stage-wise review: Stocks are reviewed on a weekly basis while under LT ASM.
- Minimum period: Stocks must complete a minimum period in the LT ASM framework (e.g., 60 or 90 calendar days, depending on the exchange and specific rules) before becoming eligible for exit.
- Performance assessment: If, during the review, the stock does not exhibit the abnormal characteristics that led to its inclusion, it may be moved out of LT ASM in a staged manner.
- Derivative contracts: For stocks in Stage IV, new derivative contracts are not issued until the stock exits the LT ASM framework, and existing contracts are settled as per expiry.
Written by Sridhar J
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