Circuit Limits for Individual Stocks and Index (HINDI)

Описание: Circuit Limits for Individual Stocks and Index are different. The investors and traders think that circuit breakers i.e. stocks that hit upper circuit or lower circuit are best bets for them. It is not true.

Upper Circuit is the limit above which a stock price cannot trade on a particular trading day. On the other hand, the lower circuit is the limit below which a stock price cannot trade on a particular trading day. These are also called circuit limits.

In case of the upper circuit, there are only BUYERS in the stock and NO sellers. whereas in Lower Circuit, there are only Sellers and NO Buyers. There is NO circuit limit for stocks trading in derivatives segment i.e. Futures and Options segment. The circuit limits for individual stocks and index are defined to control the volatility or extreme movements in the stock price or in the stock market index.

The circuit limits are revised in case the stock or index consistently or continuously break the circuit limits. The circuit limits are decreased to curb the volatility and the extreme price movements in the stock market. It is not possible to place any order in the stock till the stock price or index comes with the trading range. The circuit limits are also not applicable on the date of the stock listing. This is the reason you observe extreme stock price movements on the date of the listing.

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