ESM Stage 1: shortlisting criteria and trading conditions

Last reviewed 13 October 2026 · by Rachid Asen

Stage 1 is where every stock enters the Enhanced Surveillance Measure. A stock is shortlisted on two price-variation tests, measured on corporate-action-adjusted prices, and then trades under trade-for-trade settlement with a tight price band.

Who can be shortlisted

Main-board and SME companies with a market capitalisation below ₹1,000 crore, including newly listed ones. Stocks with derivatives (F&O) are excluded. Source: NSE's FAQ on ESM v1.1 (25 July 2025, circular NSE/SURV/69315), sections 1 and 2.1.

The two shortlisting tests

A stock qualifies if it passes either test over any of the three windows: 3, 6 or 12 months.

Test	3 months	6 months	12 months	Also required
High-low variation	above 75%	above 100%	above 150%	At least 1 standard deviation of the high-low variation of all companies under ₹1,000 crore, and a positive close-to-close change over 3 months
Close-to-close variation	above 50%	above 75%	above 100%	At least 1 standard deviation of the close-to-close variation of all companies under ₹1,000 crore

High-low variation is the highest high minus the lowest low in the window, divided by the lowest low.
Close-to-close variation is the change from the close at the start of the window to the latest close.
The FAQ's “1 standard deviation” hurdle can be read as the standard deviation itself or as the average plus one standard deviation. SurveillanceLab uses the average plus one standard deviation.

Hypothetical example. A ₹600 crore company whose share went from ₹100 to ₹190 in six months has a 6-month close-to-close variation of 90%, above the 75% floor. It is shortlisted on that test only if 90% also clears the one-standard-deviation hurdle for 6-month close-to-close variation across all companies under ₹1,000 crore.

What changes for a Stage 1 stock

Trade-for-trade settlement: every trade is settled by delivery, so buying and selling the same day does not net off.
A tight price band set by the exchange for that stock.
100% margin from the date the stock enters ESM.

The exchange announces the entry after market hours, before it takes effect. On BSE an entry takes effect on the second trading day after the notice.

What happens next

From Stage 1 a stock either moves up to Stage 2 if it keeps rising sharply, or leaves ESM at a weekly review once it has spent 90 calendar days in the framework. See ESM exit rules.

Sources

NSE: FAQs – Enhanced Surveillance Measure (ESM), version 1.1, 25 July 2025 (circular NSE/SURV/69315): eligibility, Stage 1 and Stage 2 criteria, review and exit.
NSE's daily regulatory-indicator file (REG_IND), whose ESM column is 1 (Stage 1), 2 (Stage 2) or 100 (not in ESM).
BSE's daily “Enhanced Surveillance Measure (ESM)” notices (Annexure I: entries and stage moves; Annexure II: exits) and the REG_IND file in BSE's scrip archive.

Exchange circulars change. Where this page and the current circular differ, the circular applies.

More ESM and ASM guides

What is ESM?Who can be put under ESM on NSE and BSE, what changes for the stock, and who decides.
ESM Stage 2When a Stage 1 stock moves to the stricter Stage 2, and when it can move back.
ESM exit rulesThe weekly review, the 90-day minimum and why a Stage 2 stock exits in two steps.
What is ASM?What ASM is, its long-term and short-term frameworks, the typical measures and who decides.
Long-term ASM (LT-ASM)The four long-term stages, what each one changes, and the 90-day stage-wise exit.
Short-term ASM (ST-ASM)The two short-term stages, their margins and the 5 or 15 trading-day review.
ASM vs ESM vs GSMWhat triggers each measure, its stages and typical limits, side by side.

Not investment advice. This page explains the exchanges' published rules for education only. It does not recommend buying, selling or holding any security. Inclusion, stage changes and exit are decided solely by NSE and BSE.