Learn · Mechanics
What are circuit limits (upper and lower circuit) on stocks
Circuit limits are daily price bands set by exchanges. A stock at its upper circuit cannot trade higher that day, and index moves of 10, 15 or 20% trigger market-wide trading halts.
In one line
A circuit limit is the maximum percentage a stock or index can move in a day before trading is curbed, set per stock at bands like 2, 5, 10 or 20%, while market-wide index moves of 10, 15 and 20% trigger trading halts of increasing length across the whole exchange.
BazaarBaaziSource & method
Stock-level circuits
Each stock is assigned a daily price band by the exchange, commonly 2, 5, 10 or 20%, based on factors like whether it is in the derivatives segment and its surveillance status. The upper circuit is the highest price it can trade at that day, and the lower circuit is the lowest. A stock locked at its upper circuit has buyers but no sellers, so trades simply stop printing above that line.
Stocks in the F&O segment generally do not have fixed price bands in the same way, because the derivatives act as a pressure valve, though dynamic price bands and surveillance measures still apply. For cash-segment small and mid caps, a series of upper circuits on thin volume is a classic sign of a momentum or operator-driven move, which is exactly the pattern surveillance frameworks watch.
Market-wide circuit breakers
Beyond individual stocks, the index itself has circuit breakers. A 10% move in the Nifty or Sensex triggers a trading halt, a 15% move triggers a longer halt, and a 20% move halts trading for the rest of the day. The length of the halt depends on the level breached and the time of day it happens.
These breakers exist to give the market a pause during a panic or a melt-up, so participants can absorb information instead of trading into a spiral. They are rare, but they have fired in genuine crises, and knowing they exist explains why a position can become impossible to exit precisely when you most want to.
FAQ3 reader questions · AEO-eligible
Common questions on circuit limits.
What does upper circuit mean?
Upper circuit is the highest price a stock is allowed to trade at on a given day under its daily price band. When a stock is locked at the upper circuit there are buyers but no sellers, so it cannot trade higher that session.
Can I sell a stock stuck in upper circuit?
You can place a sell order, and because a locked upper circuit has buyers waiting, a seller can usually exit at the circuit price. It is buying at a locked upper circuit that is hard, since there are no sellers.
What happens at a 20% index circuit?
A 20% move in the benchmark index triggers a market-wide trading halt for the remainder of the day. Lower thresholds of 10% and 15% trigger shorter halts depending on the time they occur.
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