Shares under Circuit Breaker
What is the meaning of circuit breaker?
In simple words, circuit breaker is the limit imposed on stocks or on Index to trade within the range.
If this range is violated then that stock or index (In case of Index, trading will be halted on both indices) will come under circuit breaker system.
Upper circuit
If the stock or index moves in upward direction and violates the upper limit then that stock or index will come under upper circuit breaker
Lower circuit
If the stock or index moves in downward direction and violates the lower limit then that stock or index will come under lower circuit breaker.
Please note - The circuit breaker will apply on both indices (nifty and sensex) even if either of the indices comes under circuit breaker.
How circuit breaker works on Individual stocks?
The price band is applied on individual stocks to trade with thin that range and if the price range is violated in either direction then the trading in halted on that stock.
The price band on individual stocks changes on daily basis.
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Impact of circuit breaker
If Index or any stock comes under circuit breaker then the trading is halted on that stock and in case of Index, trading on both indices are halted.
How circuit breaker works in case of Index
The circuit breaker system on Index applies at 3 stages of the index movement in either way at 10%, 15% and 20%.
If these circuit breakers get triggered then the trading will be halted in all equity and equity derivative markets.
The market-wide circuit breakers are triggered by movement of either the BSE Sensex or the NSE S&P CNX Nifty, whichever is breaked earlier.
In case of 10% movement in either direction
In case of a 10% movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for ½ hour. In case movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and market shall continue trading.
In case of 15% movement in either direction
In case of a 15% movement of either index, there shall be a two-hour halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00p.m. but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00 p.m. the trading shall halt for remainder of the day.
In case of 20% movement in either direction
In case of a 20% movement of the index, trading shall be halted for the remainder of the day.
These percentages are translated into absolute points of index variations on a quarterly basis. At the end of each quarter, these absolute points of index variations are revised for the applicability for the next quarter. The absolute points are calculated based on closing level of index on the last day of the trading in a quarter and rounded off to the nearest 10 points in case of S&P CNX Nifty.
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