The National Stock Exchange of India and Bombay Stock Exchange have taken major steps to curb abnormal and suspicious trading activity in the stock market. The exchanges have revised trading rules for a total of 27 stocks, with the changes set to come into effect from June 8, 2026. The move aims to control excessive volatility and speculative trading by adjusting circuit limits, raising them in some stocks while reducing them in others.
Surveillance Framework Strengthened
The surveillance mechanism of the exchanges continuously monitors market activity to detect early signs of price manipulation or unusual movement. The objective is to identify stocks where there is a sudden spike or fall in prices or an abnormal surge in trading volumes. In such cases, alerts are generated and a detailed review is conducted before corrective measures are implemented.
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The surveillance team analyzes both technical and fundamental indicators, including price movement patterns, trading volumes, market capitalization, price-to-earnings (P/E) ratios, and the impact of recent news. If any signs of manipulation or irregular activity are detected, stricter controls are immediately imposed on the concerned stock.
Margins And Circuit Filters Revised
One of the most common actions taken under this framework is the imposition of special margin requirements. Under this rule, investors are required to deposit a higher amount of capital to trade in the stock, ranging from 25% to as high as 75%. This step is designed to discourage speculative trading and ensure that only serious investors participate in such stocks.
Another key measure involves changes in circuit filters. These limits are used to cap the maximum price movement a stock can make in a single trading session. In normal conditions, a 20% circuit limit may be reduced to 10% or even 5%, depending on volatility. In certain cases, however, the limits may also be relaxed if market conditions stabilize.
In the current review, changes have been made across 27 stocks, of which 19 have seen an increase in circuit limits, while 8 have experienced a reduction. These adjustments have been made based on the trading behavior and volatility patterns of individual companies. Several small-cap and low-liquidity stocks were specifically reviewed after witnessing sharp price movements.
T2T Segment Remains Under Watch
In stocks where circuit limits were increased, the change has in some cases moved from 2% to 5% or even 10%, allowing greater price flexibility. On the other hand, stocks with stable trading patterns have been given adjusted limits based on reduced volatility concerns.
The trade-to-trade (T2T) segment also remains a key focus area. Stocks under this category do not allow intraday trading, meaning every buy transaction must result in mandatory delivery. This mechanism is typically applied to stocks showing abnormal price movements, low market capitalization, or heightened speculative activity.
The inclusion or removal of stocks from the T2T segment is reviewed every 15 days based on multiple criteria, including valuation metrics, sharp price increases, and company size. Stocks that are part of the derivatives segment are generally excluded from this category.
Investor Caution Emphasised
Market experts believe such regulatory actions are essential to maintain stability and protect investor interests. However, they emphasize that these measures do not necessarily indicate weak fundamentals of a company; rather, they are part of a broader risk-control and surveillance framework.
Overall, this move highlights the proactive approach of the exchanges in ensuring transparency, discipline, and stability in the market. Investors are advised to carefully assess fundamentals and risks before investing, especially in stocks that are subject to such surveillance actions, in order to avoid unexpected volatility-driven losses.
