What is upper circuit and lower circuit in the stock market?

The stock market is popular among traders and investors. Sometimes the stocks hit the upper circuit or lower circuit in the stock market.

In this article, We will know all things related to the upper circuit and lower circuit. Let’s start

What is upper circuit and lower circuit in the stock market? In this article, we will know, What is Upper circuit and Lower circuit in the stock market and How upper and lower circuit are determined and calculated in the stock market - mini invest
Lower and Upper circuit in detail – mini invest

In the stock market, A stock or share is not to be allowed freely to move in trend more than the limit in a single day. The Limit is decided by the exchange. This limit is known as the circuit. There are two circuits they are upper and lower circuits.

What is Upper circuit and Lower circuit in the stock market?

what is upper circuit and lower circuit in the stock market - mini invest
Upper circuit and Lower circuit in detail – mini invest

The upper circuit is the highest limit for the stocks or shares to move upward in a single day and the Lower circuit is the lowest limit for the stocks or shares to move downward in a single day. The limit is decided in percentage by the stock exchanges.

Let’s know both the circuits in detail.

What is upper circuit?

An upper circuit is the highest limit for the stock or shares price to move upward in a single day. After the upper circuit, There will be the only buyer and no seller.

The highest limit can’t be crossed by any share. After It, you will not find any seller. Most exchangers are decided 20% maximum limit for stock to movement in a single day. This is very important in the bull market.

Let’s understand by example:-

A share of company price is 100 and If it gains 20% on the next day, 100+20=120. The upper circuit will apply on it and the price of share can’t move upward from it in a single day.

What is lower circuit?

A lower circuit is the lowest limit for the stock or shares price to take movement downward in a single day. After the lower circuit, There will be the only seller and no buyer

The lowest limit can’t be crossed by any share. After It, You will not find any buyer. Most exchanges are decided 20% maximum limit for stock to movement in a single day. This is very important in a bear market.

However, You should also know, ways to gain profit in the bear market.

Let’s understand by example:-

A share of company price is 100 and If it falls 20% on the next day, 100-20=80. The lower circuit will apply on it and the price of share can’t move downward from it in a single day.

How are the upper and lower circuit is determined?

What is upper circuit and lower circuit in the stock market? In this article, we will know, What is Upper circuit and Lower circuit in the stock market and How upper and lower circuit are determined and calculated in the stock market - mini invest
Let’s know, How are the upper and lower circuit is determined? – mini-invest

The upper and lower circuit is determined by the stock exchanges, To protect the investor from an unwanted too much of a shocking moment.

So, If the upper circuit hits then there will be the only buyer and no seller. This mostly seen in the bull market. So, If the lower circuit hits then there will be the only seller and no buyer. This mostly seen in the bear market.

However, You should also know, difference between the bull and bear market.

Trigger limits and duration in Indian stock markets

10 per cent fall or rise before 1pm—trading halt of 45 minutes

10 per cent fall or rise between 1 pm and 2:30 pm—trading halt of 15 minutes

10 per cent fall or rise after 2:30 pm—no halt

15 per cent movement before 1pm—trading halt of 1 hour 45 minutes

15 per cent movement between 1 pm and 2:30pm—trading halted for 45 minutes

15 per cent movement after 2:30pm—trading is halted for the remainder of the day

20 per cent movement any time of the day—trading halt for the remainder of the day

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