Last updated on September 11th, 2022 at 07:55 pm
Circuit in stock market
In order to ensure that there is no extreme price movement that may adversely impact the investors, SEBI the market regulator sets up a circuit filter. The circuit filter sets up the price range based on the previous day’s closing price in which the stock price is allowed to move. All the trading in the stock is halted for a certain period of time when either the upper or lower circuit is triggered.
What is a circuit?
When the price of the stock moves drastically in either direction (⇑ or ⇓) i.e. when it reaches the maximum or minimum permissible tradeable price for the day it is called circuit is triggered.
What is the role of circuit filters?
The role of circuit filters is to –
- Regulate the price fluctuation on a day
- Help in curbing price manipulation.
- Help in curbing panic selling.
What is an upper circuit in stocks?
An upper circuit is the highest/maximum possible price at which the stock can trade on a particular day. Trading for the share/stock is halted for that particular day after it hits the upper circuit.
What is a lower circuit in stocks?
A lower circuit is the lowest/minimum possible price at which the stock can trade on a particular day. Trading for the share/stock is halted for that particular day after it hits the lower circuit.
Is it possible to sell shares when lower circuit hits?
Is it possible to buy shares when upper circuit hits?
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