Shares of Emkay Global Financial Services Ltd. surged to hit the upper circuit after SEBI granted in-principal approval to sponsor a mutual fund.

The company has been directed by the Securities and Exchange Board of India to incorporate an asset management company and a trustee company to set up the mutual fund business. As per SEBI’s regulations, Emkay Global should sponsor at least 40% of the AMC’s networth.

The AMC’s networth should not be less than Rs 50 crore. Furthermore, the company has to fulfill the requirements as prescribed by the SEBI within a period of six months for a successful registration.

Shares of Emkay Global rose 19.97%% to Rs 80.2 apiece as of 10:39 a.m., compared to a 0.11% decline in the benchmark NSE Nifty 50. The stock is locked in an upper circuit after rising to its intraday high of 19.97%, the most in over 14 months since Jan. 27, 2022.

The total traded volume so far in the day stood at 92.2 times its 30-day average. The relative strength index was at 78, implying that the stock maybe overbought.

Source: Bloomberg, Exchange filing