Download the App Now!

Risk Management Policy


Stocks Under GSM on NSE


Frequently Asked Questions

Questions on your mind? Dont worry we have the answers!

Graded Surveillance Measure (GSM) is a framework implemented by SEBI and NSE to monitor and control trading in certain securities. It aims to boost market integrity and protect investor interests by imposing various preemptive measures on stocks showing unusual price movements or not aligned with their financial fundamentals. These measures include trading restrictions, increased margin requirements, and other actions to ensure investors exercise caution and due diligence when dealing with such securities.

In the National Stock Exchange (NSE), Graded Surveillance Measure (GSM) is a framework brought forth to monitor and regulate trading in certain securities that exhibit unusual price movements, financials, or fundamentals. The goal of introducing GSM was to protect investor interests and market integrity through trading restrictions, higher margin requirements, and other actions. These preemptive measures ensure investors exercise caution and due diligence when dealing with securities falling under the GSM framework.

  • Selection Criteria -
    Stocks are shortlisted based on specific criteria like low net worth, low fixed assets, high or negative price-to-earnings (PE) ratios, and low market capitalization.
  • Stages of Surveillance -
    There are multiple stages in GSM, each with increasing levels of trading restrictions:
    Stage I: 100% margin requirement and a price band of 5% or lower.
    Stage II: Trade for Trade with a 5% price band and an additional surveillance deposit (ASD) of 50% of the trade value.
    Stage III: Trade for Trade with a 5% price band, trading allowed once a week, and ASD of 100% of the trade value.
    Stage IV: Trade for Trade with a 5% price band, trading allowed once a week, ASD of 100% of the trade value, and no upward price movement allowed.
  • Surveillance Actions -
    Based on price movements and trading volumes, additional measures such as moving stocks between stages, requiring deposits in cash, and maintaining restrictions until further notice are imposed.
  • Quarterly Reviews -
    Securities are reviewed quarterly to determine if they should remain under GSM based on updated financial data.
The primary objective is to alert investors to be cautious and conduct due diligence while dealing in these securities, ensuring overall market stability and integrity.

Stocks are selected for inclusion in GSM (Graded Surveillance Measure) based on the following criteria:
  • Criteria I -
    Net Worth less than or equal to Rs. 10 crores.
    Net Fixed Assets less than or equal to Rs. 25 crores.
    Price to Earnings Ratio (PE) greater than 2 times the PE of the Benchmark Index (Nifty 500) or a negative PE.
  • Criteria II -
    Market Capitalization less than Rs. 25 crores.
    PE Ratio greater than 2 times the PE of the Benchmark Index (Nifty 500) or a negative PE.
    Price to Book Value (P/B) greater than 2 times the P/B value of the Benchmark Index (Nifty 500) or a negative P/B value.
A stock remains in the GSM framework based on a quarterly review process. The specific duration depends on whether the stock continues to meet the GSM criteria during these reviews. Here's a simplified breakdown:
Initial Inclusion: Once a stock is included in GSM, it remains under surveillance until the next quarterly review.
Quarterly Reviews: Stocks are reviewed every quarter based on the latest financial data. If a stock no longer meets the criteria for inclusion, it can be moved out of the GSM framework.
Minimum Duration: Stocks are subject to GSM for at least one quarter (roughly three months) before they can be reviewed and potentially moved out if they no longer meet the criteria.
The exact time a stock stays in GSM can vary, but it will be reviewed every three months to determine if it should remain under the GSM framework or be removed.

Here are the stages of GSM:

  • Stage I -
    Surveillance Action:
    Applicable margin rate shall be 100%.
    Price band of 5% or lower, as applicable.
  • Stage 2 -
    Surveillance Action:
    Trade for Trade with a price band of 5% or lower.
    Additional Surveillance Deposit (ASD) of 50% of trade value to be deposited by the buyers.
  • Stage 3 -
    Surveillance Action:
    Trade for Trade with a price band of 5% or lower.
    Trading permitted once a week (every Monday or the first trading day of the week).
    ASD of 100% of trade value to be deposited by the buyers.
  • Stage 4 -
    Surveillance Action:
    Trade for Trade with a price band of 5% or lower.
    Trading permitted once a week (every Monday or the first trading day of the week).
    ASD of 100% of trade value to be deposited by the buyers.
    No upward price movement is allowed.
Each stage imposes progressively stricter measures to curb excessive volatility and speculative trading in the securities under surveillance.

In the GSM framework, stocks face several restrictions that vary across different stages. Initially, a 100% margin requirement is imposed, and a price band of 5% or lower is applied. As a stock moves to further and further, no upward price movement is allowed in addition to other restrictions.

GSM can impact a company's stock price by reducing volatility and liquidity due to tighter trading restrictions, potentially leading to decreased investor confidence and higher trading costs. Overall, GSM aims to stabilize prices but may result in a decline in a stock's price due to reduced trading activity and market perception.
GSM aims to stabilize the overall stock market by reducing excessive volatility and speculative trading in specific securities, which enhances market integrity and safeguards investor interests. However, it may temporarily reduce market liquidity and investor confidence due to tighter trading restrictions and increased caution, potentially affecting overall market sentiment.

GSM is important for investors because it helps safeguard their interests by reducing excessive speculation and volatility in specific securities, ensuring a more stable and secure investment environment. It provides investors with increased confidence in the market and helps mitigate risks associated with highly speculative trading activities.

Buying GSM stocks can be riskier due to tighter trading restrictions and potential volatility. It's essential to conduct thorough research and understand the implications of GSM on the stock's liquidity and price movement. While GSM aims to stabilize the market, investors should weigh the risks and benefits before investing in these stocks.

Investing in stocks under the GSM category carries risks such as reduced liquidity due to trading restrictions, increased price volatility, and potential negative market perception. Additionally, these stocks may experience higher trading costs, and their prices could be impacted by sudden changes in trading conditions or investor sentiment. It's crucial for investors to carefully assess these risks and consider their investment objectives before trading GSM stocks.

Invest & Trade with a Trading
Platform That's icon

Open your Dhan Account in minutes!


Join 5 Lac+ Users Today!


*All securities mentioned on this website are exemplary and not recommendatory.

We are bullish on India, we are bullish on India's prospects to be one of the largest economies in the world. We believe that the stock market provides a unique opportunity for all of India's traders and investors to participate in the growth story of the country.

Yet, most investing & trading platforms in India have remained more or less the same over the past decade. Times have changed and retail traders and investors have become smarter about managing their trades and money. Modern traders & investors require an online trading platform that helps them keep up with the technological advancements of our time.

That's why we're building Dhan - to help you trade, to help you invest, and to help you participate in India's growth stock via the stock market with awesome features and an incredible experience.

©2021-2024 Moneylicious Securities Private Limited. All rights reserved. CIN - U74999WB2012PTC184187 Moneylicious Securities is part of Raise Financial Services.

SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered Office: Office No. 14D, 4th Floor, Shri Krishna Chambers, 78, Bentick Street, Kolkata - 700001, West Bengal, India.
Corporate Office: A-302, The Western Edge I, Off Western Express Highway, Borivali East, Mumbai - 400066, Maharashtra, India. Land Line: 022-43116666.

For any query / feedback / clarifications, email at help@dhan.co.

In case of grievances for any of the services rendered by Moneylicious Securities Private Limited, please write to grievance@dhan.co (for NSE, BSE and MCX) or grievancedp@dhan.co (for Depository Participant). Please ensure that you carefully read the Risk Disclosure Document as prescribed by SEBI, our Terms of Use and Privacy Policy. Compliance Officer: Mr. Manish Garg and Mobile: 8655740961 Email: complianceofficer@dhan.co To lodge your complaints using SEBI SCORES, click here.

Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances

Disclaimer: Investment in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit

Attention investors:

  1. Stock brokers can accept securities as margins from clients only by way of pledge in the depository system w.e.f September 01, 2020.
  2. Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge.
  3. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.

Note: As a policy we do not give stock tips or recommendations and have not authorized anyone to give this on behalf of us. If you know anyone claiming to be a part of Dhan / Moneylicious / Raise or our associate companies or partners and offering such services, please report us on help@dhan.co. Important Information for Investors: To prevent unauthorized transactions in your trading / demat account, do not share your account details, credentials or any personal details with anyone. Keep your mobile number updated with your Stock Broker, Depository Participant and ensure that the same is registered with Stock Exchanges, Depository and KRAs. You will receive alerts and information on your registered mobile number / email for debit and other important transactions in your demat account directly from CDSL / Exchange on the same day. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Stock Broker, DP, Mutual Fund, etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. This is issued in the interest of investors.

Moneylicious Securities Private Limited also known as Dhan is only an order collection platform that collects orders on behalf of clients and places them on BSE StarMF for execution. Client expressly agrees that Dhan is not liable or responsible and does not represent or warrant any damages regarding non- execution of orders or any incorrect execution of orders with regard to the funds chosen by the client or due to, but not being limited to, any link/system failure, delay in transfer of the funds on account of any unforeseen circumstances/issues in the banking system/payment aggregators or any other problems that may result in a delay in crediting the funds into the BSE Star MF's bank account.

Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing. Dhan is not a distributor or agent of any mutual fund. Mutual Funds are not exchange-traded products. Any related disputes will not have access to the Exchange-investor redressal forum or arbitration mechanism. For other disclaimers please refer https://dhan.co/advertisement-disclaimer/

Download client registration documents (Rights & Obligations, Risk Disclosure Document, Do's & Don'ts) in vernacular language: BSE | NSE | MCX

Kindly, read the Advisory Guidelines of BSE | NSE | MCX for investors as prescribed by the exchange with reference to their circular dated 27th August, 2021 regarding investor awareness and safeguarding client's assets

Important Links: SEBI | BSE | NSE | MCX | CDSL | SCORES | ODR Portal | Investor Charter for Stock Brokers | Investor Charter for DP | UCC Advisory | e-Voting for Shareholders

Important Information: Terms of Usage | Disclaimers | Privacy Policy | Grievances | Risk Management Policy | Risk Disclosure | Advertisement Disclaimer