The Securities and Exchange Board of India (Sebi) is reviewing the process to bring companies under the graded surveillance measure (GSM) with a view to improve transparency, said two people in the know. GSM aims to tackle the surge in stock prices of companies with poor fundamentals or low market capitalisation witnessing abnormal price rises, and which are not supported by a significant improvement in financial or operational performance.

A little more than 700 firms have come under GSM since it was introduced in February last year. Experts reckon the criteria to select …