What happens when a stock or indices hits the upper or lower circuit? (2024)

FAQs

What happens when a stock or indices hits the upper or lower circuit? ›

If a stock hits its upper circuit, there will be only buyers and no sellers; similarly, if a stock hits its lower circuit, there will be only sellers and no buyers in the stock.

Similarly, when a stock hits its lower circuit, it means that the stock's price has decreased by the maximum limit allowed for the day. In this scenario, there are only sellers and no buyers for that stock. 5. Intraday trades are converted to delivery when the upper or lower circuit is hit.

Once a stock hits the lower circuit, no more sell orders are allowed, and trading in that stock is temporarily halted for the rest of the trading session. However, buy orders can still be placed, as the purpose of the lower circuit is to limit selling activity, not buying.

So now when the stock hits the upper circuit, the price point of that stock cannot move above that point i.e. it has reached its maximum level for that particular trading session.

Who Should Invest in Lower Circuit Stocks? Lower circuit stocks, known for their volatility, often hit their downside limit, halting trading when prices fall too steeply. Investing in these stocks is suitable for a specific investor profile due to the high risk and potential for significant returns.

When a stock hits Upper Circuit. There are only buyers (BID) and no sellers (ASK) in the market. Hence if you have an open Sell MIS / CO position, and the stock hits the upper circuit at the time of square-off, the buy order will not get executed since there are no sellers in the market.

Upper circuit trading represents the maximum percentage increase in a stock price within a single trading session. An upper circuit stock is beneficial but risky.

Circuit breakers are triggered when an index or stock price breaches prescribed limits. When sellers outweigh buyers, stock prices hit the lower circuit and vice-versa. Any particular news or global event can trigger an upper or lower circuit. There are also times when circuits are triggered without any reason.

Don't let a loss get to you — either mentally or financially. If you don't sell too early, you'll sell too late. To lock in solid gains, sell while your stock is still going up.

In India, SEBI is the sole decider of circuit filters. There are only buyers and no sellers when a stock hits its upper circuit. Likewise, there are only sellers and no buyers when a stock hits its lower circuit.

How long does a stock stay in upper circuit? ›

Stocks hitting upper circuit means that the stock's price has reached the maximum permissible limit for upward movement for that trading session. Therefore, trading gets halted for that time.

Yes, you can sell shares at the upper circuit limit if you have already bought the shares before the circuit hits. However, it is important to note that selling at the upper circuit limit may not always be the best decision.

Placing an order at the pre-open session is the most convenient and straightforward technique for breaking out and selling a lower circuit stock. At 9 AM, you should place a sell order in the pre-market. Since the market is volatile, trading on the lower circuit is normal. It goes through a lot of ups and downs daily.

A circuit limit or a circuit breaker is defined as the limit either upper or lower, a stock could rise or fall, before the trading of the stock is halted depending upon the time at which the stock hits the circuit. The Securities and Exchange Board (SEBI) has defined various circuit levels namely 2%, 5%,10%, and 20%.

It is advisable to break free from the lower circuit stock as prolonged exposure can cause a lot of loss. The most convenient and easy way of breaking out and selling a lower circuit stock is to place an order during the pre-open session.

Yes, you can sell shares at the upper circuit limit if you have already bought the shares before the circuit hits. However, it is important to note that selling at the upper circuit limit may not always be the best decision.

If a seller is unable to deliver the promised shares, they will be charged the difference between the auction's settlement price and their original selling price. Furthermore, an auction penalty of 0.05% per day is levied for each day the shares remain undelivered.