What Are ESM, GSM, and ASM Lists in the Indian Stock Market?

If you track Indian equities regularly, especially smallcaps and midcaps, you may have noticed that some stocks suddenly become harder to trade. Intraday positions disappear. Margins shoot up. Volumes dry out overnight.

This usually happens when a stock is placed under ASM, GSM, or ESM.

These are surveillance frameworks used by Indian stock exchanges to manage risk and protect market integrity. They are not penalties, and they are not accusations of fraud. They are guardrails.

Understanding these lists matters because they directly affect liquidity, volatility, and execution risk.

Why Do Exchanges Use Surveillance Lists?

Indian markets have a very active retail base with over 12 crore individual investors currently. This is great for participation, but it also means speculative rallies can build quickly, especially in low-float stocks.

Surveillance measures are introduced to slow things down when price action disconnects from fundamentals. The intent is simple. Reduce excess leverage, discourage manipulation, and give investors time to reassess risk.

In short, these lists exist to prevent small mistakes from turning into systemic problems.

ASM – Additional Surveillance Measure

ASM is the most common surveillance category and also the least intimidating.

A stock can enter ASM when it shows unusual behavior such as sharp price swings, sudden spikes in volume, or excessive volatility without any meaningful news or earnings trigger. This often happens during momentum phases.

Once under ASM, the exchange may increase margin requirements or restrict leverage. The exact rules depend on the stage of ASM, but trading is still allowed and delivery-based investors are mostly unaffected.

The important thing to understand is that ASM does not imply poor fundamentals. Many fundamentally strong companies briefly enter ASM during sharp rallies or sector-wide moves.

ASM is best viewed as a caution sign, not a warning siren.

GSM – Graded Surveillance Measure

GSM is more structured and more serious than ASM.

Stocks placed under GSM typically show deeper concerns. These may include weak financials, inconsistent disclosures, governance issues, or repeated episodes of speculative trading.

GSM works in stages. As a stock moves from lower to higher stages, trading restrictions increase. This can include higher margins, trade-to-trade settlement, removal of intraday trading, and tighter price bands.

Liquidity tends to fall sharply as GSM stages progress, making entry and exit more difficult.

For investors, GSM is a signal to pause and re-evaluate. The stock may still recover, but it demands deeper due diligence and a longer time horizon.

ESM – Enhanced Surveillance Measure

ESM is the strictest form of surveillance.

Stocks are placed under ESM when they show extreme price movement combined with very low market capitalization, thin liquidity, and heavy retail participation without fundamental backing.

Under ESM, trading becomes highly restrictive. Intraday trading is not allowed, margins are typically 100 percent, settlement is trade-to-trade, and price bands are tightly controlled.

Liquidity can vanish almost instantly, which means even small sell orders can move prices significantly.

ESM is essentially the exchange saying that capital preservation matters more than price discovery at this stage.

How Should Investors Think About These Lists?

When a stock enters ASM, GSM, or ESM, it signals a change in how the exchange is monitoring trading activity. The category and stage indicate the level of scrutiny applied, along with the types of trading conditions that may be imposed. Factors such as volumes, delivery trends, and recent disclosures help explain whether recent price movement has been driven more by market sentiment or by business-related developments.

For stocks that fall under stricter surveillance categories, trading conditions typically become more restrictive as one moves from ASM to GSM to ESM. Liquidity, margin requirements, and settlement rules may change, which can materially affect how the stock trades in the market, independent of the company’s underlying business.

Surveillance lists are not judgments on a company’s quality or future performance. They reflect the exchange’s assessment of trading risk at a particular point in time, based on observed market behavior rather than long-term fundamentals.

Comparison Table

Closing Thoughts

ESM, GSM, and ASM are not traps set by exchanges. They are signals. Ignoring them does not increase returns, it increases blind risk.

Smart investors do not just ask which stock is moving. They ask why it is moving and whether the risk is still worth taking.

At Multibagg AI, surveillance status is tracked alongside fundamentals so investors can see the full picture, not just the price.