After hitting upper circuit , when will be again limit increased , whether bids should be at upper circuit limit price for 5 , 10 mins , then limit would be increased ?
For stocks with derivatives, the following criteria need to be met for relaxation of the circuit limits (NSE website) -
2. How does Exchange’s flexing mechanism works?
The process of flexing is system driven. In the event of a market trend movement in either direction, the dynamic price band shall be relaxed by 5% at a time in the direction of the price movement during the day in co-ordination with the other Exchange as follows:
If the dynamic price band of the underlying security has been relaxed OR
If the last trade in the contract occurs at 9.90% and more of the base price AND
A minimum of 25 trades have been executed with 5 different UCCs on each side of the trade at or above 9.90% or more of the base price. This process shall be repeated as the price trend moves in the same direction.
In exceptional circumstances, all the Exchanges shall consult and relax the dynamic price band.
In addition to the above criteria, SEBI introduced extra measures due to ongoing market volatility in March 2020 -
4. Flexing of dynamic price bands for F&O stocks
Currently, stocks in the F&O segment are subject to dynamic price bands. The bands are relaxed in the event of market trends in either direction. One of the conditions followed by stock exchanges for relaxing the price band is that a minimum of 25 trades should be executed with 5 different UCCs on each side of the trade at or above 9.90% and so on.
In addition to the existing requirements, the dynamic price bands may be flexed only after a from the time of meeting the existing criteria specified by stock exchanges for flexing.
These measures were last reviewed in November 2020 and still remain in force.
Thanks Prayag sir.