What Is ASM Framework? Here Is Why NSE Placed Adani Group Stocks Under This After Hindenburg Rout

A garrulous Adani Group and its stocks have probably touched their zenith in news headlines after the scathing Hindenburg Research report. After nose-diving beyond expectations, another blow hit the Adani Group stocks on Thursday after the National Stock Exchange (NSE) placed Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements under the ASM framework (additional surveillance measure).

Since the decision has come into effect from today – February 3, 2023, many have been wondering that what exactly the ASM framework means for Adani Group stocks at this point. Let’s take a look. 

What Is The ASM Framework – Explained

NSE’s ASM framework, under which Adani Enterprises, Adani Ports and Ambuja Cements have been placed, is an additional surveillance initiative by the Exchanges and the Securities and Exchange Board of India (SEBI) to enhance ‘market integrity and safeguard the interest of investors.’ A pre-emptive initiative, the ASM framework gives the option of measures such as reduction in price band, periodic call auction and transfer of securities to Trade for Trade segment from time to time.

To clarify the purpose and need of an ASM framework, NSE writes, “The shortlisting of securities under ASM is purely on account of market surveillance and it should not be construed as an adverse action against the concerned company/entity.”

To explain further, the criteria for shortlisting scrips under the ASM framework, as per official NSE’s documents, is as follows:

• High low variation
• Client concentration
• Close to close price variation
• Market capitalisation
• Volume variation
• Delivery percentage
• No. of unique PANs
• PE

At this point, when Adani Group stocks are facing a massive selling spree in response to the Hindenburg rout, it has made them extremely volatile. Hence, coming under the ASM framework would primarily mean that the stocks being subjected to more stringent rules. As per experts, the measure is usually taken to slowdown the extreme volatility of stock prices. 

Once a stock is under the ASM framework, it can neither be pledged nor be given intraday leverages like cover orders etc. As a result of stocks coming under the ASM framework, traders' profit or loss gets constrained as the stock price gets stable. In addition to this, corporate actions like bonus, dividend etc., aren't impacted once scrip is under the ASM framework.