Volatility in share prices drop on addnl periodic price bands

Volatility in share prices have come down significantly following the introduction of additional periodic price bands for securities 'exclusively' listed on BSE platform.
The exchange, in October, had introduced weekly, monthly, quarterly and yearly based price band framework for the securities exclusively listed on its platform to prevent excessive volatility in the shares.
Earlier, BSE had a daily price band mechanism -- maximum permissible limit, within which the share price can move in a day. The listed-securities are assigned a daily price band of either 20 per cent, 10 per cent, 5 per cent or 2 per cent based on the pre-decided joint criteria.

According to an analysis, just 12 securities witnessed a price variation of at least 75 per cent in October compared with 37 shares during April-September period of the ongoing fiscal, indicating a decrease of 67 per cent.
Besides, 98 securities saw a price variation of greater than or equal to 50 per cent in the first six months of the current fiscal, while 39 securities witnessed such changes during October.
In case of a price variation greater than or equal to 25 per cent, 367 securities were there in the first half of the current fiscal as against 290 in October.

Further, the number of surveillance actions against securities have also fallen during the period under review.

This long duration price band framework, which is in addition to the daily price band mechanism, apply to stocks "exclusively" listed and traded on BSE equity trading platform including SME and SME ITP platform.
Under the new framework, a security having daily price band of 20 per cent can move upward or downward up to 60 per cent in a week. Whereas, in a month it can move upward or downward up to 100 per cent. It can move 200 per cent or 400 per cent on a quarterly and yearly-basis, respectively.

Similarly, security with a daily price band of 10 per cent can move 30 per cent on a weekly-basis, 60 per cent on monthly-basis, 100 per cent on quarterly-basis and 200 per cent in a year.
A stock assigned a daily price band of 5 per cent would be allowed a 20 per cent (weekly), 30 per cent (monthly), 60 per cent (quarterly) and 100 per cent (annually) movement.
(Reopens DCM128)
Meanwhile, in a separate circular, NSE said it will
suspend trading in the equity shares of Elder Pharmaceuticals and Era Infra Engineering with effect from February 25 for non-compliance with Clause 41 of the listing agreement for two consecutive quarters.

The companies violated the norms in June and September quarters of the current fiscal, it said.
The exchange also freezed the entire promoter shareholding of the two companies with effect from today till further notice.
However, NSE said in case the firms comply with respective requirements including payment of fines by February 19, the trading in equity shares will not be suspended.