ESM Stage 2: criteria, call auctions and the way back to Stage 1

Last reviewed 13 October 2026 · by Rachid Asen

Stage 2 is the stricter stage of the Enhanced Surveillance Measure. Only a stock already in Stage 1 can move there, and it trades only in periodic call auctions until a weekly review moves it back to Stage 1.

When a Stage 1 stock moves to Stage 2

Under NSE's FAQ on ESM v1.1 (25 July 2025, circular NSE/SURV/69315), section 2.2, a Stage 1 stock moves to Stage 2 when both of these hold:

1. A sharp further rise: a close-to-close gain of 15% or more over 5 consecutive trading days, or 30% or more over a month.
2. A valuation test: the company's P/E is negative, or more than twice the P/E of the BSE 500 index.

What changes in Stage 2

• Periodic call auctions only: orders are collected and matched in auction sessions instead of trading continuously.
• A tighter price band than in Stage 1.
• Trade-for-trade settlement and 100% margin continue.

On the live list on this site, Stage 2 rows trading this way are tagged “Call auction”.

Moving back to Stage 1

A stock stays in Stage 2 for at least one month. After that, a weekly review can move it back to Stage 1 if its close-to-close gain over the month is under 15%.

Leaving ESM is stage by stage: a Stage 2 stock cannot exit directly. It first returns to Stage 1, and the exit comes from a later Stage 1 review once it has spent 90 calendar days in the framework.

Hypothetical timeline. A stock enters Stage 1 on 1 March and moves to Stage 2 on 15 March. The earliest weekly review that can move it back to Stage 1 is the first one on or after 14 April (one month later), and only if the stock's gain over that month is under 15%. Its 90 calendar days in ESM end on 30 May, so the earliest exit is the first weekly Stage 1 review after both the step-down and 30 May.

More on the exit: 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.

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.