GSM stands for Graded Surveillance Measure. It is a stricter surveillance framework compared to ASM and is applied to stocks where weak company fundamentals are combined with unusual price activity, typically stocks of small companies whose share prices are rising sharply despite poor financial performance.
GSM has six stages, with restrictions becoming progressively stricter at each stage:
- Stage 1 to Stage 3 – Higher margin requirements, trade-to-trade settlement
- Stage 4 – Only existing holders can sell, no fresh buying allowed
- Stage 5 and Stage 6 – Trading shifted to monthly sessions, meaning the stock can only be traded on one specific day per month
Once a stock is in the higher stages of GSM, liquidity drops significantly. Selling becomes difficult because there are very few buyers, and trading only happens on designated days.
The GSM list is published and updated regularly by NSE and BSE. If a stock you hold moves into higher GSM stages, it is important to review your position carefully given the liquidity constraints.
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