Suzlon Energy shares hit lower circuit for 2nd straight day; stock under stage IV ASM framework

Suzlon Energy shares were trading at Rs 26.35, down 4.7 percent on NSE at 2:35 pm

Suzlon Energy share price fell 5 percent on October 10, extending its losses from the previous session. The stock hit the lower circuit for the second straight day after it was put on Direct stage IV “ASM framework" with effect from October 9. ASM stands for Additional Surveillance Measures.

Suzlon Energy shares were trading at Rs 26.35, down 4.7 percent on NSE at 2:35 pm.

In an effort to safeguard the interest of investors and enhance market integrity, market regulator SEBI and stock exchanges introduced various enhanced pre-emptive surveillance measures. ASM IV is the final stage and the margin requirement rises to 100 percent for all clients while the price band narrows to 5 percent for the stock. According to experts, this is a mechanism to control the price movement to protect investors. However, the liquidity of stock gets impacted.

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Any stock that is placed under the ASM list loses some sheen as traders tend to avoid it because of liquidity concerns. Hence, profit booking may be seen in stocks that come under the ASM list. However, stock prices can stabilise in a few days once profit booking is over. The same has to be watched for Suzlon Energy, said analysts.

Despite the correction recently, Suzlon Energy has delivered multi-bagger returns so far this year. The stock has rallied more than 150 percent YTD, outperforming the benchmark Nifty 50 by a margin. In the last year, the stock has surged by 253 percent. Analysts have been positive about the company on improving fundamentals, debt reduction plans and strong order flows.

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Kotak Institutional Equities in a report last month had said, “The company has a 33 percent market share in the total installed wind electricity base. The government has set a target of adding 8GW of wind capacity annually until FY2030, to meet its renewable targets. As such, Suzlon will need to gain a significant market share in the wind generation sector, to meet the current market expectations, observed Kotak analysts.

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