Chapters in Market Foundations
Chapter 5 of 6 · 3 min read
Circuit limits and price bands
Why a stock suddenly stops moving, and what upper and lower circuits do.
Exchanges set a daily price band for each stock, commonly 2%, 5%, 10% or 20%. When the price touches the band, matching pauses. Hitting the top is an upper circuit; hitting the bottom is a lower circuit.
Circuits follow news, results, rumours or index rebalances. Trading may resume the next session or in an auction. Index-wide circuit breakers (10%, 15%, 20% moves) halt the entire market.
How to read it
A stock stuck at upper circuit with huge pending buy orders shows strong demand; stuck at lower circuit shows panic. Either way, you may be unable to exit at the price you want, which is a liquidity risk to price in.
Key takeaways
- Circuits are a risk control by the exchange, not a verdict on the company.
- A locked stock can trap you: you may not be able to sell at lower circuit.
- Index circuit breakers pause all trading during extreme moves.
Put it into practice
Open the live page on Market Intelligence and see this concept on real data.
Keep learning
- Volume, liquidity and delivery · Technical Analysis & Trading Tools
Education only, not investment advice. Updated 2026-10-09.