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Glossary term

Circuit Limits (Price Bands)

Also called: Price Bands, Price Band, Circuit Limit, Circuit Limits, Upper Circuit, Lower Circuit, Upper Circuit Limit, Lower Circuit Limit, Daily Price Band, Price Band Limit, Market-Wide Circuit Breaker, Index Circuit Breaker, Circuit Breaker.

On NSE, a circuit limit (price band) is the most a security's price may move in one trading session, measured from the previous day's close. The "upper circuit" caps how far it can rise. The "lower circuit" caps how far it can fall. Orders priced beyond those bounds are not accepted. Separate market-wide circuit breakers can halt trading across the whole market for a set duration when a benchmark index moves by a large pre-defined percentage.

How it is read

A stock "hitting upper circuit" or "hitting lower circuit" means its price has reached the day's band edge. Trades can then happen only at or inside that edge for the rest of the session. One-sided order flow can leave buyers or sellers with no counterparty. Common stock bands are 2%, 5%, 10% or 20%, assigned by the exchange. Many securities in the derivatives (F&O) segment instead work under dynamic price bands. The exchange can flex those during the day, rather than fixing a single band for the whole day. Market-wide index breakers on the benchmark index are typically structured at 10%, 15% and 20% thresholds. Each pauses trading for a duration that depends on the trigger level and the time of day it occurs. Traders generally read a circuit as a sign of a sharp, one-directional imbalance and a temporary limit on tradability, rather than a settled "true" value.

What it does not tell you

A circuit limit only bounds the day's price range. It does not indicate why the move happened, or whether it reflects fundamentals, news or low-liquidity order flow. It says nothing about where the price will go next. Hitting a circuit does not guarantee a fill. When a stock is locked at upper or lower circuit, orders can sit unexecuted because there is little or no opposing volume. The band is recalculated each day from the prior close, so a stock can move through several "circuits" over consecutive sessions. The band edge is an administrative limit set by the exchange, not a support or resistance level derived from trading. Dynamic-band and F&O securities may not behave like fixed-band stocks. Index circuit breakers and individual stock price bands are separate mechanisms and should not be conflated.

Track

Before your first stock market order

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Reference. NSE Circular: Price Bands / Index-based Market-Wide Circuit Breakers and SEBI guidelines on market-wide circuit breakers.
The lesson that uses this term

NSE vs BSE: What an Exchange Does, and What It Does Not

NSE and BSE are two separate exchanges. An exchange is a venue with rules, where buy and sell orders meet. It is not a broker, not a demat account and not an index. The same company's shares can trade on both. The orders waiting at each venue need not match. What matters is the price you can really get for the quantity you want, after charges. Not the lowest figure on a screen.

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