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100 FAQ's on Basic Finance

Module Units

What are Circuit filters & trading bands

Whenever there is a price fluctuation or volatility in the share market of more than 5%, circuit filters are used for the next 45 minutes. As a result of this, you cannot buy or sell that particular stock on which circuit filter has been applied. 

 

For example, if a stock is trading at ₹200, and its circuit filter is fixed at 10%, then trading will be halted for 45 minutes, if the price rises by 10% in a trading session (₹220), or falls by 10% (₹180).

 

In that 45 minutes, SEBI checked the irregularities which led the market to become volatile. But if the irregularities remain undiscovered, then again a circuit filter is applied and you cannot trade on that particular stock for the entire day.

 

There are basically three circuit filters for indices which are 10%, 15% and 20%

 

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Units 65/101