Circuit Breakers

Circuit breakers on the stock market work in a similar way to how an electrical fuse halts the working of the devices once there is too much load. It helps in stopping the system for a small period of time rather than breaking the system.

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Index Circuits

In case the index(BSE or NSE) rises or falls by more than ten percent, the circuit breaker kicks in and halts trading. Depending on the change in indexes, different period of break times are put in. Complete information related to the how much time the trading is halted can be found here. 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 if the market hits 10% before 1 p.m. then as explained there would be a one hour halt in trading and after resumption of trade in case if the market hits 15% in either index, then there shall be a two-hour halt. 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 the remaining part of the day. If the market fails to resume at 10% then the next limit is placed at 15% and finally at 20%. In case if market fails to resume from 15% and if it hits 20% irrespective of the time, the trading shall be halt for remaining part of the day.

Circuits on Individual stocks

Circuits are also present on individual stocks. The stocks present in the BSE 30 and the Nifty 50 do not have any circuits built on them. These are known as the Non Index scripts. Incase there is huge percentage swings in these stocks, the whole market circuits can be triggered. For the other stocks on the nifty, circuits are built at 2,5 or 10 percent. This limit is determined by the impact cost and other things related to the script. These values are calculated monthly and for  a new stock ,it is placed in a group which has most companies in the same market cap.