Nishant Shah, CEO comments on the scarcity premium of stocks in an article by Neha Joshi on SEBI’s 211th Board Meeting.
Speaking to Mint, Nishant Shah, Managing Partner and CEO of Affinisio Technologies, made the point that the thinner a stock’s liquidity, the greater the chance that part of its valuation rests on scarcity rather than on fundamentals — which is not a healthy basis for a price. He noted the view that letting the price of, say, a tenth of a company’s stock set the value of the whole is the tail wagging the dog, and that the scarcity premium is in practice very difficult to isolate from the quoted price. On that reading he regarded the move as a positive one over the long run.
Why a scarcity premium matters to a compliance function
A scarcity premium arises when the freely traded float of a company is small relative to the demand for its shares. Price discovery then rests on a narrow base, and the quoted price can drift away from what the underlying business would otherwise support. The effect is familiar in thinly traded counters, in newly listed companies before lock-ins expire, and wherever a large block sits with promoters or strategic holders.
For a listed company’s compliance function the consequence is practical rather than theoretical. A thin float amplifies the price impact of any single trade, which raises the sensitivity of employee dealing, of pre-clearance thresholds and of trading-window controls. The same conditions make unusual movements harder to read, because ordinary liquidity effects and information-driven moves look alike on a small base.
That is the ground Affinisio(ETT) covers for employee trade pre-clearance and tracking, and Affinisio(SDD) for the structured digital database that records who held unpublished price-sensitive information and when.
Read the full article below – Sebi unleashes mega reform package for capital markets; IPOs, governance, new investments in focus | Stock Market News
Coverage published by Mint on 12 September 2025. Jonosfero International has rebranded to Affinisio Technologies in 2025. References to the firm have been updated to accurately reflect the current entity name; the publication’s own links are articles as originally published.
