BAJAJ BROKING

Notification
No new Notification messages
Ather Energy IPO is Open!
Apply for the Ather Energy IPO through UPI in just minutes.
Open a Free Demat Account
Pay ZERO maintenance charges for the first year, get free stock picks daily, and more.
Trade Now, Pay Later with up to 4x
Never miss a good trading opportunity due to low funds with our MTF feature.
Track Market Movers Instantly
Stay updated with real-time data. Get insights at your fingertips.

What are Upper Circuit and Lower Circuit?

If you’ve ever dipped your toes into the stock market, especially here in India, you’ve likely heard the terms "upper circuit" and "lower circuit." These are mechanisms put in place by stock exchanges like the BSE and NSE to keep extreme price swings in check. Think of them as speed breakers on the volatile road of stock trading—designed to protect investors from sudden jolts and maintain some order in the market.

In this blog, we’ll break down what these circuits mean, how they work, and why they matter to anyone keeping an eye on the BSE Sensex or Nifty Index Share Price.

Upper Circuit Meaning

The Upper Circuit Meaning is simple—it’s the highest price a stock can climb to in a single trading session. Set by the stock exchange, this limit acts like a ceiling to curb wild price jumps. When a stock hits its upper circuit, trading pauses temporarily because there’s too much buying pressure and not enough sellers.

This often happens when the market’s buzzing with optimism—say, after a company announces stellar earnings or a big merger. For traders into intraday trading, futures, or options, understanding this can help gauge market sentiment, especially during a bullish run.

Lower Circuit Meaning

On the flip side, the Lower Circuit Meaning refers to the lowest price a stock can drop to in a trading session. It’s the floor that stops a free fall when selling pressure outweighs buyers. When a stock hits this lower price band, trading halts to prevent further panic-driven declines.

This could happen due to bad news—like a company reporting losses or political unrest shaking investor confidence. For those using a Margin Trading Facility (MTF), knowing this limit can be a heads-up on how far a stock might slide in a day.

How Upper Circuit and Lower Circuit Works

So, how do these circuits actually function? The upper and lower circuits are calculated based on the previous day’s closing price of a stock or index. When a stock rockets to its upper circuit or crashes to its lower circuit, the exchange steps in and pauses trading—sometimes for a few minutes, sometimes longer. This breather helps cool off the frenzy, whether it’s a buying spree or a sell-off.

It’s a bit like the market taking a timeout to catch its breath. For indices like the BSE Sensex or Nifty Index Share Price, the process is similar but with broader thresholds, ensuring stability across the market.

Ways to Use Circuits on Company Stocks

  • Using Stop-Loss Orders: Set a stop-loss to automatically sell a stock if it nears the lower circuit, limiting your downside.
  • Monitoring Circuits: Keep tabs on these limits to get a sense of a stock’s volatility—handy for Stock Market Basics.
  • Avoid Herd Mentality: Just because a stock hits the upper circuit doesn’t mean it’s a golden ticket—same goes for a lower circuit crash.
  • Conduct Proper Research: Dig into earnings, debt, or news to understand why a stock’s moving—don’t just follow the crowd.
  • Spot Opportunities: A lower circuit might signal a dip to watch, while an upper circuit could hint at a peak to cash in on.

These pointers aren’t foolproof tricks but ways to think smarter about the market’s ups and downs. Circuits give you clues—how you read them is up to you.

Upper and Lower Circuits for Stocks

For individual stocks, the upper and lower circuit limits vary. Stocks in groups like A, B, T, and TS—actively traded ones—typically have limits between 2% and 5%. Meanwhile, stocks in the S group, often more speculative, can have wider bands of 10% to 20%.

For example, if a stock closed at Rs. 1,000 yesterday with a 10% circuit, today’s upper limit would be Rs. 1,100, and the lower limit Rs. 900. These limits shift daily based on the closing price, keeping them relevant to current market vibes.

Upper and Lower Circuits for Indices

For market indices like the BSE Sensex or Nifty Index Share Price, circuits work on a tiered system with three levels:

  • 10% of the previous day’s close—triggers a 15-minute halt if breached early.
  • 15%—a bigger pause, maybe 45 minutes, depending on timing.
  • 20%—trading stops for the day if this line’s crossed.
     These broader limits ensure the entire market doesn’t spiral out of control, giving everyone a chance to recalibrate.

Factors Driving the Upper/Lower Circuits

  • Political Unrest: Uncertainty can spook investors, pushing stocks to the lower circuit.
  • Trade Agreements: Favourable deals might spark demand, hitting the upper circuit.
  • Mergers & Acquisitions: Big moves can boost optimism—or strain finances, affecting prices.
  • Interest Rates: Rising rates often drag prices down; lower rates lift them up.
  • Company Performance: Strong results drive buying; weak ones trigger selling.
  • Investor Confidence: Good news fuels demand; bad vibes sink it.

Five Essential Facts Related to the Upper and Lower Circuit

  • Circuits are safety nets—they stop panic buying or selling during wild swings.
  • Limits are updated daily on exchange websites—check before you trade.
  • Upper circuit? No sellers, so you can’t buy. Lower circuit? No buyers, so you can’t sell.
  • If trading halts for the day, intraday orders flip to delivery—good to know for Intraday Trading.
  • Limits aren’t fixed forever—they adjust with market conditions and volatility.

Conclusion

By now, you’ve got a solid grip on what are upper circuit and lower circuit in the share market. These mechanisms are like guardrails, keeping the market from veering too far off course. Whether you’re tracking stocks for futures, options, or just brushing up on stock market basics, understanding circuits can help you navigate the chaos. They’re not predictors of success, but they do signal when things are heating up or cooling off.

Stay informed, keep researching, and approach the market with your eyes wide open.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://www.bajajbroking.in/disclaimer

Share this article: 

Frequently Ask Questions

No Data Found

search icon
investment-card-icon

Trading Terminal

Trading terminals simplify investing. Discover their features and functionalities for executing trades, managing portfolios, and effectively tracking market trends.

investment-card-icon

Short Selling

Short selling happens when an investor borrows a security, sells it in the market, and aims to buy it back later at a lower price to make a profit.

investment-card-icon

What are Upper Circuit and Lower Circuit?

Learn how upper & lower circuits protect investors from stock market volatility. Gain insights & strategies for smarter trading decisions.

investment-card-icon

Moving Average Convergence Divergence (MACD)

MACD (Moving Average Convergence Divergence) is a key momentum indicator in technical analysis. Learn how to read and interpret it on Bajaj Broking.

investment-card-icon

Intraday Trading Indicators

Intraday indicators serve as powerful tools for day traders to analyse market trends and make informed decisions. Explore the top indicators for intraday trading.

investment-card-icon

Relative Strength Index (RSI)

RSI measures the speed and rate of price changes in the market. Learn RSI calculation, working, importance, and limitations on Bajaj Broking!

investment-card-icon

What is Intraday Trading? Meaning, Types and Benefits

Discover the meaning of intraday trading, how it works in India, and key strategies for beginners. Learn to understand price movements with Bajaj Broking.

investment-card-icon

Muhurat Trading 2024: Everything You Should Know

Learn about Muhurat trading in 2025, including the key date, timings, and benefits of this auspicious trading session.

investment-card-icon

200 Day Moving Average: How it Works

Gain insights into how the 200 Day Moving Average can help traders make informed investment decisions and filter out fundamentally strong securities.

investment-card-icon

What is Equity Delivery

Equity delivery involves buying stocks to hold for the long term. Discover its benefits, charges, and tips for effective investing with Bajaj Broking.

Disclaimer :

The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes.

The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.

Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.

Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

[ Read More ]

For more disclaimer, check here : https://www.bajajbroking.in/disclaimer

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading

Bajaj Broking App Download

9.5 lakh+ Users

icon-with-text

4+ App Rating

icon-with-text

4 Languages

icon-with-text

₹4400+ Cr MTF Book

icon-with-text