On some days a small company's share jumps 20% in the morning and then stops moving: there are thousands of buyers and no sellers. Or a stock falls 5% and freezes, with sellers queued up and no one buying. This is a circuit. Indian exchanges set limits on how far prices can move in one day to slow down panic, manipulation and errors. This guide explains the limits for individual shares, the different rules for F&O stocks, and the rare market-wide halts.
Price bands for individual shares
A price band is the range within which a share can trade during the day, measured from the previous day's closing price. Orders outside the band are rejected.
Upper limit = previous close × (1 + band) · Lower limit = previous close × (1 − band)
For shares that are not in the futures and options segment, the exchanges use fixed bands, commonly 2%, 5%, 10% or 20%. The band depends on how volatile and liquid the share is and on surveillance concerns. Exchanges review bands regularly and can tighten a band, for example from 10% to 5%, when a share moves unusually or shows signs of speculation.
A worked example: a small company closed at ₹200 with a 5% band. Today it can trade only between ₹190 and ₹210. If good news brings a flood of buy orders, the price reaches ₹210 and stays there. Buyers keep queuing at ₹210, but almost no one sells, so few trades happen. The share is locked in the upper circuit. Tomorrow the band is measured from the new close of ₹210, so the next limit is ₹220.50.
Upper and lower circuits in practice
- Upper circuit: the share hits its top limit. Buy orders pile up; the quote screen shows a large pending buy quantity and zero sell quantity. You may not be able to buy at all.
- Lower circuit: the share hits its bottom limit. Sell orders pile up with no buyers. If you hold the share you may be unable to sell, sometimes for several days in a row.
The lower circuit is the bigger risk. A stop-loss order (see stop-loss orders) does not help if there is no buyer at any allowed price. Shares of small companies that hit lower circuits repeatedly can lose a large part of their value before any trade is possible. This is one reason many traders limit position size in thinly traded shares with narrow bands.
Shares in F&O: dynamic price bands
Shares that have futures and options do not have a fixed daily band. Instead the exchange applies a wider dynamic price band (also called an operating range), typically starting around 10% from the previous close. If the share approaches that limit, the exchange can pause briefly and then widen the band in steps, so trading can continue. Futures and options on those shares have their own operating ranges linked to the underlying share.
A worked example: a large F&O company closed at ₹1,500 and reports poor results. In the morning it falls towards ₹1,350, 10% down, close to its first dynamic limit. Instead of locking the share there, the exchange widens the range by a further step, and trading continues. By the afternoon the share trades at ₹1,290, 14% down. A holder could have sold at any point during the day, at a worse price but with buyers available. A small company with a fixed 5% band and similar news would have been locked at ₹1,425, and holders might have waited several days to sell at all.
That is why a large company can fall 15% or more on bad results while a small non-F&O company is held at 5%. Large, liquid shares are allowed to find their price; small, illiquid ones are slowed down. Check NSE's current circulars for the exact percentages, which are revised from time to time.
Market-wide circuit breakers
Separate from single-share bands, there are index-based market-wide circuit breakers. If either NIFTY 50 or SENSEX moves 10%, 15% or 20% from its previous close, trading in all shares and equity derivatives across all exchanges stops for a set time. The trigger levels are fixed at the start of each quarter from the index's previous quarter-end close, rounded. The halt lengths and percentages are set by the regulator and can change, so check the current rules on NSE before relying on them.
| Move | When it is hit | Trading halt |
|---|---|---|
| 10% | Before 13:00 | 45 minutes |
| 10% | 13:00 to 14:30 | 15 minutes |
| 10% | After 14:30 | No halt |
| 15% | Before 13:00 | 1 hour 45 minutes |
| 15% | 13:00 to 14:00 | 45 minutes |
| 15% | After 14:00 | Rest of the day |
| 20% | Any time | Rest of the day |
After a halt, trading restarts with a short pre-open call auction, like the morning pre-open, to set fair prices. These halts are very rare. In recent memory the 10% lower circuit was hit during the March 2020 crash, and an upper circuit halted trading after the 2009 general election results.
With NIFTY near 25,000, a 10% move is about 2,500 points. To put that in context, here is the range NIFTY's options currently expect to expiry:
On a normal day the expected move is a small fraction of the 10% trigger. That gap shows how extreme a market-wide circuit is: it needs a move many times larger than anything options usually price.
Circuits and market breadth
On very strong or very weak days, many small shares hit their bands at once. Breadth shows how one-sided a day is:
When advances heavily outnumber declines, lists of upper-circuit shares grow long; on broad sell-offs, lower circuits multiply. The top gainers list often shows shares sitting exactly on their band limit.
How traders deal with circuits
- Check the band before buying. Your broker's quote screen shows the day's upper and lower limits. A 2% or 5% band signals a closely watched or illiquid share.
- Be careful chasing upper circuits. Buying a share locked at its upper limit often means getting filled only when sellers return, which can be the moment the move ends.
- Size for exit risk. In shares that can hit lower circuits, the real risk is not the stop-loss price but the chance of being unable to sell for days.
- Watch surveillance lists. Exchanges place some shares under additional surveillance measures (such as higher margins or trade-for-trade settlement) alongside tighter bands. These shares can be harder to trade.
Common mistakes
- Thinking a circuit means the price is "right". A locked share has no fair price for the day; the band only stops trading beyond a limit.
- Assuming every share has a 20% limit. Bands differ by share and change over time.
- Expecting F&O shares to freeze. Their bands are dynamic and can be widened during the day.
- Confusing index circuits with stock circuits. A market-wide halt stops everything; a stock circuit affects one share.