Electronic ticker boards indicate the latest stock figures inside the atrium at the National Stock Exchange (NSE) in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

NSE Puts 60 Firms Facing Insolvency Under Enhanced Surveillance

Sixty Indian companies facing insolvency proceedings under the bankruptcy law are now being put under additional surveillance by the country’s largest stock exchange National Stock Exchange of India Ltd.

“The aforesaid securities shall be monitored on a pre-determined objective criteria and margin shall be levied at the rate of 100 percent once the criteria gets satisfied,” NSE said in a circular on its website. “These securities shall be further monitored for an objective criteria and shall be shifted to Trade-to-Trade segment once the criteria gets satisfied.” The circular will come in effect from June 11.

Market participants may note that the aforesaid surveillance measures shall be in conjunction with all other prevailing surveillance measures being imposed by the exchanges from time to time.
NSE Circular

Market regulator Securities and Exchange Board of India and stock exchanges had in March rolled out Additional Surveillance Measures aimed at checking any abnormal rise in stock prices that did not correspond with the company’s financial health. Earlier this month, BSE Ltd. added 109 companies to ASM. It had added that this should not be seen as an adverse action against the firms.

The selling in Indian mid caps intensified as investors dumped these stocks in panic after the firms were brought under ASM. SEBI is also probing an allegation that the BSE’s move was leaked to market operators before an official announcement.

Among the criteria used to identify companies that will be brought under enhanced surveillance are volatility in the stock price, concentration of shareholding and the number of times the scrip hits the circuits or daily limits.