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Circuit limit

Robin (AUDITOR) (854 Points)

05 August 2010

WHAT IS CIRCUIT LIMIT IN TRADING OF SECURITIES LISTED ?

Lets say Circuit Limits263.15 / 175.45? What does it mean ?

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10 Replies

Amit Nishania (CA Final - Student) (495 Points)
Replied 05 August 2010

20% is the circuit limit....

Robin (AUDITOR) (854 Points)
Replied 05 August 2010

Can u please eleborate it ?

i need to purchase or sell securities and the circuit limit mentioned is above

what does it mean?

Devendra Kothari (Head - Finance) (32 Points)
Replied 05 August 2010

visit nse/bse sites for full details

kalpesh (assistant) (193 Points)
Replied 05 August 2010

its a limit beyond which a price of a scriptt cannot go in a day. Everyday the Circuit limit gets revised based on the last closing price.

Devendra Kothari (Head - Finance) (32 Points)
Replied 05 August 2010

This limit may be 5% 10% & 20% depends upon the Scripts.

Robin (AUDITOR) (854 Points)
Replied 05 August 2010

Originally posted by : Devendra Kothari
	visit nse/bse sites for full details

I visited BSE site but only price movements are visible, circuit limit details i need to know

Devendra Kothari (Head - Finance) (32 Points)
Replied 05 August 2010

scriptts of F & O segments haven't any circuit limits

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 05 August 2010

Originally posted by : Robin
	WHAT IS CIRCUIT LIMIT IN TRADING OF SECURITIES LISTED ? Lets say Circuit Limits263.15 / 175.45? What does it mean ?

Hi,

The price of 263.15 in your example is the upper limit of that security.It is known as UPPER CIRCUIT.Say if there is some very POSITIVE NEWSFLOW abt the company, or any other positive thing for company (Or may be due to overall market Sentiment), a lot of buying will be seen in the security.And when demand will rise, price is bound to rise.But this "263.15" is the upper limit, above which one cannot trade the security.

Similarly,the price of 175.45 is the lower limit of that security.It is know as LOWER CIRCUIT. Say if there is some very NEGATIVE NEWSFLOW, or any other negative thing for company (Or may be due to overall market Sentiment), a lot of selling will be seen in the security.And when supply will rise, price is bound to fall.But this "175.45" is the lower limit, below which one cannot trade the security.

I hope this answers your question.

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Robin (AUDITOR) (854 Points)
Replied 05 August 2010

Thanks Himanshu

CA GIRISH (Chartered Accountant) (1796 Points)
Replied 06 August 2010

Circuit Limit/Breaker System in Stock Market

SEBI has a rule called Circuit Breaker in Stock Market for both Index and Stock specific Circuit Limits. The Circuit filter limit is introduced in intention to reduce the speculations in the market and stock specific trading. There will be two ways a circuit filter applied, upper circuit filter and lower circuit filter. So when buying stocks in the current stock markets you must first learn about the stock market and know the stock market prices and then consider online trading stocks.

Index specific Circuit Filter

Index specific circuit filter applied to either BSE Sens*x or the NSE S&P CNX Nifty whichever is breached earlier. Now there are three filters for Index based circuit viz 10%, 15% and 20%.

If either BSE Sens*x or NSE S&P CNX Nifty falls 10% before 1.00pm then trading halts for one hour in the market. If index drops after 1.00pm but before 2.30 pm then trading halts for half hour. If the index drops after 2.30pm then there will be no halt for trading at 10% level and market shall continue trading for the remaining time.

If either BSE Sens*x or NSE S&P CNX Nifty falls 15% before 1.00pm then trading halts for two hour in the market. If index drops after 1.00pm but before 2.00 pm then trading halts for one hour. If the index drops on or after 2.00pm then there will be no trading for the remaining time.

In case of 20% drop in either of the index then the trading halts for the remaining day.

This percentage of circuit filters are revised after every quarter and new percentages are arrived for the next quarter.

Stock specific Circuit Filter

Stock specific circuit filters are applied in both BSE and NSE index, the percentage for circuit filter limit is 2%, 5%, 10%, 20%. When a stock is on upper circuit limit then there will be only buyers in the market and no seller exists and hence the price is up. On the other hand lower circuit limit is when there are only sellers in the market for that stock and hence the stock price is down.