In light of the swiftly growing investor interest in small and medium-sized company (SMEs) shares, the stock exchanges have declared that they would be implementing surveillance measures in a graded way, known as Graded Surveillance Measures (GSM). According to the exchanges, a joint meeting with market regulator Sebi resulted in the decision to expand surveillance to SMEs. When specific anomalies in a company’s financial records are discovered, the monitoring system is activated. Many brokers cease trading or purchasing monitored equities in order to safeguard investors’ interests.

“Market traders should note that the monitoring arrangement will be in addition to all other prevalent monitoring measures undertaken by the exchanges from time to time,” the exchanges stated in a circular they released last week.

Starting with the September 2023 quarter, the SME shares will be subject to the monitoring arrangement. During the quarterly examination of important securities, the exchanges will make available the initial list of chosen businesses. This modification will be implemented in tandem with the September implementation of the trade-to-trade settlement for SME shares and the Short Term Additional Surveillance Measure (ST-ASM) framework.

It was once that reducing betting activity and avoiding unjust rewards in this market are the goals of this judgment. This month, the BSE SME IPO index has increased by over 13%, and so far this year, it has increased by around 84%. In the last three years, returns have exceeded 3,000 percent.

By contrast, the Sensex has risen by about 50% in three years and has gained 8.5 percent this year.

Following the observation, there was a decrease in the average daily turnover of SME stocks. But things started to pick up again. Prior to the introduction of ST-ASM, August’s average daily turnover was Rs 85 crore, which was twice as much as January’s. In October, this revenue dropped to Rs 58 crore; but, in November, it surged once again to Rs 70 crore.

108 SME IPOs raised almost Rs 3,000 crore between April and October, according to statistics from Prime Database. Sixty percent of them are the kinds of concerns that have raised money in the last three months.