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Stocks Under Increased SEBI Surveillance Fall As Investors Sell In Panic

Shares of companies placed under additional surveillance -- or ASM -- by the stock market regulator have plunged, adding to the selloff in the mid-cap counters.

Among the entities facing increased vigil are shrimp exporter Apex Frozen Foods Ltd., graphite electrodes maker HEG Ltd., cement and calcined pet coke maker Rain Industries Ltd. and distiller Radico Khaitan Ltd. Shares fell by 5 to 22 percent in the last five trading sessions.

Increased vigil is aimed at checking any abnormal rise in stock prices not commensurate with the financial health of companies. But it’s expected to impact liquidity in mid caps and add to the selling pressure. The S&P BSE MidCap Index has already fallen nearly 13 percent this year compared to a 2 percent gain in the benchmark S&P BSE Sensex. And that comes when rising fuel prices and a weakening rupee threaten to stoke inflation add to the government’s fiscal constraints.

The Securities and Exchange Board of India and exchanges had in March decided roll out the new measure. BSE Ltd. added 109 companies to the additional surveillance mechanism on June 4. The bourse, however, had said it should not be construed as an adverse action against the companies.

Among the criteria used to identify the companies are volatility in the stock price, concentration of shareholding and the number of times the scrip hits the circuits or daily limits.

For a company under additional surveillance:

  • The circuit breaker kicks in at a 5 percent change in price.
  • Buyers need to pay brokers upfront the full amount to acquire shares.

Here’s how some the stocks under the additional surveillance mechanism fared in the last five sessions: