Explained ASM and BSE Ltd. From IPO to ASM
Explained ASM and BSE Ltd. From IPO to ASM
BSE Ltd., Asia’s oldest stock exchange, listed on the NSE in 2017.
Below is a detailed analysis of its stock price from IPO to June 2025, covering price increases, bonus issues, ASM inclusion, and price drops, with approximate adjusted prices to account for corporate actions.
1. IPO and Initial Price Performance (2017)
IPO Details:
Date: February 3, 2017, BSE became India’s first listed stock exchange.
Issue Price: ₹806 per share (face value ₹2).
Listing Price: ₹1,085 on NSE, a 35% premium over the issue price.
Allotment: 2:1 oversubscription, with 51.22 lakh equity shares offered.
Initial Increase:
By March 2017, the stock hit ₹1,200, up ~49% from the IPO price, driven by optimism about BSE’s monopoly in equity trading and Sensex’s brand value.
By December 2017, it traded at ~₹1,000, reflecting market consolidation but a ~24% gain from IPO.
Why?: Strong investor confidence in BSE’s 140-year legacy and growth potential in India’s underpenetrated market (3 crore Demat accounts in 2017).
Need: BSE needed capital to modernize tech (6-microsecond trading speed) and expand derivatives, while investors sought exposure to a unique exchange stock.
Price Growth (2017–2024)
Long-Term Rally:
2018–2020:
The stock stagnated, trading between ₹500–₹800 (adjusted for bonuses), due to competition from NSE and low derivatives volume.
By July 2020, it hit a low of ~₹400 (adjusted).
2021–2023:
BSE’s stock surged with India’s bull market (Sensex from 40,000 to 80,000).
Key drivers:
Increased retail participation (10 crore Demat accounts by 2024).
Growth in BSE’s derivatives segment (Sensex options).
SEBI’s colocation case resolution in 2024, boosting exchange stocks.
By July 2024, the stock reached an adjusted 52-week low of ₹705, then soared to ₹2,529.33 (adjusted) by May 20, 2025, a ~259% gain in a year.
Five-Year Return: ~5,200% from 2020 to May 2025, making BSE a multibagger.
Bonus Issues and Price Adjustments -
First Bonus (2022):
Ratio: 2:1 (2 new shares for every 1 held).
Date:
Announced mid-2022, ex-bonus ~August 2022.
Impact: Pre-bonus price ~₹2,100 (unadjusted); post-bonus, adjusted to ~₹700 per share.
Total value remained unchanged, but shares tripled, boosting liquidity.
Price Post-Bonus:
By December 2022, the adjusted price rose to ~₹900, reflecting market optimism.
Second Bonus (2025):
Ratio: 2:1, announced March 30, 2025; ex-bonus May 23, 2025; record date May 23; allotment May 26; listing May 27.
Details:
Issued 27.46 crore new shares (face value ₹2), using ₹54.91 crore from general reserves and ₹0.02 crore from capital redemption reserves.
Total shares increased to ~406.03 crore.
Price Adjustment:
Pre-bonus close (May 22): ₹7,015.
Post-bonus open (May 23): ₹2,358, a ~66% notional drop due to the adjustment (3x shares, 1/3 price).
Intraday (May 23): Rose 2–5% to ₹2,389–₹2,395, with market cap at ~₹96,000 crore
ASM Inclusion and Price Drop (June 2025)
ASM Placement:
Date: June 11, 2025, NSE placed BSE under Stage 1 ASM.
Price Drop:
June 11:
BSE hit an all-time high of ₹3,030, but fell 4–5% to ₹2,855–₹2,885.20 after ASM inclusion, ending a nine-day winning streak.
RSI at 80.9 (overbought) signaled a correction.
June 12:
Dropped another 3.3% to ₹2,786.80, totaling 7.3% over two days, driven by profit-booking and ASM’s restrictive rules.
RSI fell to 69.5, MACD at 202.4 remained bullish.
June 13:
Traded at ~₹2,764.90 by noon, down 8% from the ₹3,030 peak
Here, I’ll explain why NSE placed BSE Ltd.’s stock (ticker: BSE) under ASM
What is ASM (Additional Surveillance Measure)?
ASM is a monitoring tool by SEBI and exchanges (NSE/BSE) to protect investors from stocks showing unusual or risky behavior.
Why is a stock included in ASM?
A stock is put under ASM if it shows:
1-High price volatility
2-Abnormal trading volumes
3-Sudden sharp rise or fall
4-Low fundamentals or high speculation
5-Being used in pump-and-dump schemes
The NSE/BSE does this to warn investors that something unusual is happening in the stock.
When a stock is put under ASM, traders get scared.
It becomes less attractive for short-term traders.
Certain restrictions are added (like 100% upfront margin, T+2 delivery, no intraday).
This reduces trading activity and volume, so demand drops, and price falls.
What are the restrictions under ASM?
Depending on the stage (ASM Stage 1, 2, etc.), restrictions may include:
1-100% margin requirement
2-No intraday trading allowed
3-T+2 settlement only
4-Trade-for-trade settlement (buy today, sell only after delivery)
These rules make trading harder, so people avoid the stock.
What happens when ASM is removed?
1-Stock becomes free from restrictions
2-Intraday trading allowed again
3-Margins become normal
4-Investor/trader confidence returns slowly
Why NSE Added BSE Stock to the ASM List -
The NSE added BSE Ltd.’s stock to the ASM list on June 11, 2025, due to unusual price surges and high trading volumes, triggering regulatory scrutiny to curb potential speculation or manipulation.
Below is a detailed explanation
1. Why Did NSE Add BSE Stock to ASM?
Unusual Price/Volume Activity:
BSE Ltd.’s stock surged 116% over three months (March–June 2025), with volumes exceeding 1 crore shares in four of the previous nine trading sessions.
This rapid price movement and high trading activity raised red flags for NSE and SEBI, suggesting potential speculative trading or manipulation.
ASM is a SEBI-mandated framework to monitor stocks showing abnormal price or volume variations, ensuring market integrity and protecting investors from volatility-driven losses.
Criteria for ASM inclusion include:
High-Low Price Variation: E.g., >150% + Beta * Nifty 50 variation over three months.
Close-to-Close Price Variation, Volume Variation, Client Concentration, and Number of Unique PANs.
BSE’s stock met these objective parameters, prompting its placement in Stage 1 ASM, which imposes a 5% daily price band and 100% upfront margin for buyers to deter speculative trading
Regulatory Objective:
SEBI and NSE use ASM to alert investors to exercise caution and conduct due diligence when trading stocks with unusual activity.
The goal is to prevent market abuse (e.g., pump-and-dump schemes) and maintain stability, especially for stocks like BSE, which, as a listed exchange, influences market sentiment.
The addition wasn’t due to fundamental issues with BSE Ltd. (a robust exchange with >$5 trillion market cap in May 2024) but rather to control price volatility that could mislead retail investors.
Market Context:
BSE Ltd.’s stock price rally may have been driven by positive market sentiment, increased retail participation (10 crore Demat accounts in 2024), or speculative trading in exchange stocks.
What Was the Need for This Action?
Investor Protection:
Rapid price surges, like BSE’s 116% gain, attract retail investors chasing gains, increasing the risk of losses if prices correct.
ASM ensures investors are aware of risks via exchange notifications and stricter trading conditions (e.g., no intraday trading, T2T settlement).
Market Stability:
BSE Ltd., as India’s oldest exchange, is a high-profile stock.
Unchecked volatility could ripple across markets, eroding trust.
ASM curbs excessive speculation, ensuring fair trading
Regulatory Compliance:
SEBI’s mandate under the 1992 Act emphasizes investor protection and market integrity.
ASM reflects proactive surveillance, responding to real-time data (e.g., BSE’s volume spikes)
What Loopholes or Mechanisms Were Involved?
Potential Loopholes Exploited:
Speculative trading or coordinated buying (e.g., high client concentration) could drive BSE’s price surge, exploiting low liquidity or retail FOMO.
ASM counters this by imposing 100% margins and 5% price bands, reducing leverage-driven manipulation
BSE’s ASM inclusion addresses market-level loopholes, not company misconduct.
Regulatory Mechanisms:
Trade-to-Trade (T2T): BSE stock trades on a T2T basis under ASM, preventing intraday sales, ensuring delivery, and reducing speculative churn.
Price Bands: A 5% daily limit curbs sharp swings, protecting investors from volatility, similar to circuit breakers in your stock market terms list.
Surveillance Dashboard: NSE’s real-time monitoring flagged BSE’s activity, enabling swift ASM action, reflecting SEBI’s tech-driven oversight since 1995.
What Happens to F&O Trading Under ASM?
ASM primarily targets cash (equity) segment trading but has indirect and limited direct effects on F&O trading, especially for stocks like BSE under Stage 1 Short-Term ASM (ST-ASM). Here’s a breakdown:
Direct Impact on F&O Trading:
Margin Requirements:
For F&O stocks under Stage 1 ST-ASM, SEBI allows Margin Intraday Square-off (MIS) and other leverage products (e.g., Bracket Orders, Cover Orders) in the F&O segment, unlike the cash segment where intraday leverage is banned.
However, exchanges may impose higher margin requirements for F&O contracts to align with ASM’s risk mitigation goals.
ASM is not a punishment, it’s a safety alert.
A stock in ASM list may fall due to restricted trading & fear.
Once the stock becomes stable and healthy, NSE may remove it.
Removal usually brings back volume and price recovery.
Normally, how many days does a stock stay in ASM?
There is no fixed number of days — it depends on the stock’s behavior and review by NSE/BSE.
However, based on past data:
Minimum period: Around 20 trading days (1 month approx.)
Often reviewed: Weekly or fortnightly
Maximum: Some stocks remain in ASM for 3–6 months or even longer if the risk remains high
Example 1: RattanIndia Power (BSE/NSE)
Went into ASM Stage 1 in 2023 due to price rise and volume spike
Stayed for around 45 trading days
After volatility reduced, it was removed
After removal, the stock gained volume and recovered slightly
Example 2: Brightcom Group
Entered ASM due to high price movement and questionable financials
Was in multiple stages (ASM Stage 1 to 2, then back to 1)
Stayed under ASM for months due to ongoing concerns
Even after removal, price remained under pressure due to fundamental issues
Example 3: Selan Exploration
Entered ASM due to sudden price jump
Stayed for about 3 weeks
Once trading normalized, NSE removed it
Stock gained positively post-removal
Key Point:
If a stock is fundamentally strong and gets added to ASM due to short-term volatility, it often recovers well after removal.
But if the company has weak or shady fundamentals, even ASM removal won’t help it much.
