What Are Upper Circuit And Lower Circuit In the Stock Market?

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hello friends, In this blog post(What Is Upper Circuit And Lower Circuit In Stock Market) we are going to discuss the lower circuit and upper circuit in the share market.

If I explain to you in one single line then the lower circuit and the upper circuit is a price band that contains one lower price and one upper price value which is known as the lower circuit and upper circuit.|What Is Upper Circuit And Lower Circuit In Stock Market|

And the share market can fluctuate between these two values in one single day.|What Is Upper Circuit And Lower Circuit In Stock Market|

If you are not very aware of the share market then you probably would not have understood the meaning of the above paragraph clearly, but don’t worry I explain to you this lower circuit and upper circuit with a very simple example|What Is Upper Circuit And Lower Circuit In Stock Market|

I make you understand this concept with the help of one example, suppose the share price of Tata Steel is 100 and its’ slower circuit is 80 rupees and the upper circuit is 120 then this means that this share price can fluctuate between 80 to 120 in one single trading day|What Is Upper Circuit And Lower Circuit In Stock Market|

The circuit can be applied to both stocks as well as indexes like Sensex and Nifty.

The stock or index circuit can be updated each day before starting the market depending on the circuit circumstances.

Once the lower or upper circuit is touched or crossed the market is stopped for some time and then it opens for a…

…15-minute pre-open session then it starts regularly until the next circuit touches or ends the day which one comes first.

The circuit band may be in the percentage band of 5%, 10%, 15%, 20%, etc.

And this percentage band will also depend on the volatility of the stock in the market.

What is the use of these lower circuits and upper circuits in the stock market?

These lower and upper circuit is usually used to protect the investor and brokers from huge unwanted losses in case of one-sided extreme fluctuation of the share price.

If we do not put the lower circuit then the stock price can land at 0 and this could be dangerous for…

…various investors and brokers and the same case while sharing price increases without the upper circuit.

Who decides this percentage band of the upper circuit and lower circuit in the stock market?

This is decided by the stock exchange NSE and BSE.

Who manages and monitors the upper circuit and lower circuit in the share market?

This is monitored and managed by the SEBI.

And once the lower circuit or upper circuit touches then SEBI stops the share market or stock marketing…

…trading for some time completely and it is open for 15 min pre-open sessions and then it continues regularly.

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Conclusion:

So, friends within this blog post(What Is Upper Circuit And Lower Circuit In Stock Market), we have understood the concept of the lower circuit and upper circuit in this blog post and we know that is the safe price band for any stock or index which is decided by the stock exchange in which the market can fluctuate safely. This circuit protects the investors and brokers from any unwanted huge market loss when there is any drastic up and down in the share market.

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