A price limit is the maximum permissible upward or downward movement in the price of a security or futures contract during a single trading session, set by the stock exchange or regulator to prevent extreme volatility. In India, SEBI and the exchanges enforce daily price bands on individual stocks—typically 2%, 5%, 10%, or 20% depending on the stock's trading history and volatility. For indices, market-wide circuit breakers are triggered at 10%, 15%, and 20% intraday declines. Price limits provide investors time to assess information and prevent panic-driven price dislocations that could destabilise markets.
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