Upper and lower circuits are price band limits set by SEBI and Indian stock exchanges that restrict how much the price of a stock can rise (upper circuit) or fall (lower circuit) in a single trading session. Once a stock hits its circuit limit, trading in that stock is halted until the exchange decides to re-open it or the session ends. Circuit filters are set at 2%, 5%, 10%, or 20% depending on the stock's trading history and volatility profile. For widely traded index constituents, separate market-wide circuit breakers trigger halts across the entire exchange when the Nifty or Sensex drops by 10%, 15%, or 20% intraday. Circuits prevent panic-driven extreme price moves and allow the market to stabilise.
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