What is upper circuit and lower circuit ? Is it like the short term resistance and support ?
No, these are not Support and Resistance levels.
Upper and Lower Circuits are the maximum limits to which stock prices can move either up or down on a particular day. Stocks can have Circuit Limits of either 2%, 5%, 10% and 20% expect for stocks which have F&O contracts, these have no circuit limits.
Along with this, there are Circuit Breakers in place on Indices, hitting these limits brings trading to halt across the broad for a specified period of time, you can learn all about this in detail here.
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Other than equity shares which have 20 ,10 , 5 and 2% circuit limits …RE (rights entitlement ) have fixed circuit of 40% (Pricol , Shoppers stop etc) wherein WARRANTS have circuit limit of 20% (moldteck pack ) Hdfc(10% ).
@ShubhS9 Do the stocks which have F&O contracts have circuit limits or doesn’t have limits ?
What about the stocks which don’t have F&O contracts ?
Stocks which have F&O contracts have no circuit limits, there are price bands to ensure trading is done within this limits and there is no erroneous order entry. Once price reaches this point the bands are relaxed further immediately.
As mentioned above, the stocks which do not have F&O contracts have price bands varying from 2%, 5%, 10% and 20%.
@ShubhS9 DHFL donot have F&O contracts . But almost fell 50 % in one single day (21-sep-2018) . How does this deal with the lower circuit limit which says stock dosent fall more than 20% in one single day ?
DHFL did have F&O Contracts back then.
My bad , Thankyou
ONGC just hit its upper circuit (100.80) at 10:26 am . Now its 10:38 . Not even a single trade got executed . It has F&O contracts . Even though why is it not traded ? Why didn’t its upper circuit got pushed further ?
As you can see in ONGC, there is only Demand (Buyers) and no Supply (Sellers), that is why exchange must have not relaxed the circuit limits.
Good Day,
I’m reaching out since I need to know how are the upper and lower circuits determined? How do you exit a lower circuit stock? How do you find the upper circuit limit?
Moving to receive your kind feedback.
Regards,
Amina
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In what price band a stock should trade within is decided by the exchanges.
Circuit Limit is calculated based on previous closing price of the security.
Eg, if stock ABC has price band of 10% and closes at 100, the next day Upper Circuit limit will be 110 and Lower Circuit Limit will be 90.
You can download the list of applicable price bands for each scrip from NSE website.
Though, you do not have to manually calculate them, the Circuit Limit are already displayed in Market Depth on Kite.
It is tough to sell a stock which is hitting Lower Circuit as there are only sellers and very less to none buyers.
If there are no buyers, how does the share hit the lower circuit? There has to be at least 1 buyer, right?
Please confirm