A measure used by stock exchanges to avert panic selling. For example, on the NYSE and Nasdaq, if the Dow Jones Industrial Average falls by 10% then the market halts trading for one hour. There are other circuit breakers for 20% and 30% falls. Circuit breakers are measures that are used by a stock exchange authorities when there is a need to avert a sense that something … [Read more...]

Upper circuit is a system to curb excessive speculation in the stock market, applied by the stock exchange authorities, when the index spurts or plunges by more than a fixed limit. Trading is then suspended for some time to let the market cool down. The market wide circuit breakers would be triggered by movement of either Sensex or the NSE S&P CNX Nifty whichever is … [Read more...]

The circuit is a upper and lower limit beyond which the trading is not allowed. Different stocks have different circuit limits. Usually they are 5%, 10% and 20%. For example, let's say closing price of X stock yesterday was 100 Rs. The applicable circuit limit for X is 5%. In this circumstances, the price of X can't go above 105 (5% above previous close) and below 95 (5% below … [Read more...]