How does the circuit limit revision happens in a day?

General
1

I am actually curious about today which actually happened with SBI. I placed a order for selling at 179 at it was rejected. Then, the UC limit was revised and then the price move beyond 179.

How many times can regulatory bodies revise the circuit limit in a day?

2

Thereā€™s no restriction on the number of times the Exchange can revise the circuit limit. Circuits are revised on need basis based on the LTP of the stock.

3

There could be excessive volatility in the prices of stocks based on certain global, economic or corporate actions that could sometimes lead to a panic selling or buying, driving the prices haywire. To curb such eventualitites, circuit limits are applied.

A circuit limit or a circuit breaker or collar, indicates the limit, either upper or lower, that a stock could rise or fall, before a trading halt would be implied on that particular stock for a specific time frame.

The exchange has a predefined list of stocks for whichĀ limits are decided and the freeze is applied atĀ 2%, 5%, 10% or 20% dependingĀ on the scrip.

But in case of scrips which have active derivative products, such price bands do not apply. They are allowed to rise or fall without any limitations.Ā 

In case of the index, collars areĀ applied at 10%, 15% and 20% levels depending onĀ the time when theĀ move occurs.

  • If it moves 10%, before 1:00 pm, there is a 45 min freeze. If the move occurs between 1:00 pm and 2:30 pm, there a 15 min freeze and if it happens post 2:30, there is no freeze.
  • If it moves 15% before 1:00 pm, a freeze of 1 hour 45min is applied. If the move occurs between 1:00 pm and 2:00 pm, the halt would be for 45 min and if the move is post 2:00 pm, the halt is till the end of day.
  • If it moves 20% at any given point of the day, the trading is suspended for the remainder of the day.
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