What is Stock Market Circuit — What Is Circuit In Stock Market
Whenever there is huge volatility in the stock market, the circuit is triggered. It is also called Circuit Filter. Today I will tell you what is a circuit in the stock market and why circuits are used.
What is Stock Market Circuit
The stock market is very volatile and fluctuates, to protect the investors from this fluctuation, the system of the lower circuit and upper circuit has been started.
When the lower circuit or upper circuit occurs, trading in a single stock or the entire stock market is closed for some time. So that there is no trading in that share or the entire share market and the volatility of the market gets time to reduce.
Circuits are put in place to reduce market volatility and protect investors from huge volatility. Circuits are in the range of 2% to 20%.
There are two types of circuits in the stock market.
Lower Circuit
Upper Circuit
What Is Lower And Upper Circuit In Stock Market
What is Lower Circuit: When the stock market starts to decline very rapidly for some reason, then after the market falls to a limit, the buying and selling of shares in any one share or the entire share market are closed. This is called lower circuit lag.
Lower circuits are available in the range of 20%, 15%, 10%, 5%, 2%, it may vary from stock to stock.
For example, when the number of sellers is more than the buyers, then a lower circuit occurs. If a stock closed yesterday at Rs 100, then today the whole day it cannot go below Rs 80 if that stock falls to Rs 80. If there is a lower circuit in that stock and trading is stopped.
What is Upper Circuit: When the stock market starts growing very fast for some reason, then after increasing the market to a limit, the buying and selling of shares in any one share or the entire share market is closed. This is called the upper circuit setting. Upper circuits also seem to be in the range of 20%, 15%, 10%, 5%, 2%, it may vary from stock to stock.
For example, when the number of buyers exceeds the number of sellers, then an upper circuit occurs. If yesterday a stock closed at Rs 100, then today it cannot go above Rs 120 for the whole day, if that share reaches Rs 120 then the upper circuit is taken in that stock, and trading is stopped.
How does the circuit Looks Like
There are two types of circuits in the Indian stock market, the first circuit is applied to protect one stock from fluctuations, and the second is applied to protect the entire stock market from huge fluctuations.
If there is a huge fall or rise in Nifty and Sensex, then the entire market is closed for some time.
When anyone's stock or stock market index (Nifty and Sensex) move up or down 10% before 1 pm, the circuit is triggered and trading is stopped for 45 minutes after that trading is resumed. Is.
Even after that, if the fluctuations in the market do not end, then, in the same way, lower and upper circuits of 15% and 20% also appear.
To know the Circuit Limit of any stock, you can visit the NSE website.
I hope you have understood this article What is Stock Market Circuit — What Is Circuit In Stock Market. If you still have any questions related to Circuit Limit In Stock Market then you can ask by commenting.
