Surveillance Impact: Penny stocks slump on BSE as bourses beef up rules to curb volatility

These micro-smallcap companies, with a market capitalization of less than Rs 500 crore, will be moved into surveillance under two stages based on the movement and criteria set for the same, the exchanges said in a circular on Friday.

On the BSE, 50 stocks fell between 5-13% following the news development.

Jonjua Overseas was the worst hit, dropping 12% to Rs 8.35. Some of the other stocks were EPIC Energy, Haria Exports, Nexus Surgical, Indo-City Infotech, Gilada Finance and Investments, Ganga Pharmaceuticals, Ishaan Infrastructures, Country Condos, Otco International, Zenlabs Ethica, Safa Systems, Kaushalya Infrastructure, and Aastamangalam Finance, that lost 5-10%.

Under the enhanced surveillance, stocks will be part of the framework for a minimum period of 90 days. However, under stage 2 of the framework, stocks will be retained for a minimum period of 1 month, NSE said in its circular.
The stocks completing 90 calendar days in the framework will be eligible for stage-wise exit, subject to such securities not meeting the entry criteria as laid down in the framework, the exchange said.

Traders that wish to trade in stocks under the framework will have to pay 100% margin upfront.

The exchanges have excluded public sector enterprises and public sector banks from the framework, and also those stocks that trade in the futures and options segment.

The enhanced surveillance is aimed at informing investors about the unusual price movements in stocks, which will help in better investment decisions and also curb losses for investors.

Such a move comes in the wake of the steep volatility seen in Adani stocks in late January following the explosive report by Hindenburg Research against the group. Several Adani stocks were put under additional surveillance by exchanges following the rout triggered by the report.

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