When the price of a stock starts to rise suddenly, a top circuit is applied to it.
When there is a sudden sale in the stock, a lower circuit is applied to it.
History of the Upper Circuit and Lower Circuit started June 28, 2001
New Delhi. The stock market is down these days and investors are under stress. In the midst of the market slide, investors fear that there is no circuit to the downside here. Do you know what is upper circuit or lower circuit in the stock market and why it happens?
Ordinary investors are sometimes very surprised how the stock price keeps rising and falling. Due to the supply and demand of most shares, the value of shares keeps rising and falling. Every time the demand for a stock increases, its price increases and when people start selling the stock, the value of the stock starts to decrease. There are 2 types of circuits in any stock market. The first is the Upper Circuit and the second is the Lower Circuit. The percentage at which this circuit will be charged is decided by the central office.
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What is the lower circuit?
Sometimes a company’s stock falls rapidly. In such a situation, there shouldn’t be much of a drop in that stock, so the circuit is installed. In such a situation, suddenly everyone starts selling shares of a company, then the value of that share will decrease to some extent and its trading will stop. This value decrease limit is called the lower circuit. The lower circuit has 3 phases. It is taxed at 10 percent, 15 percent, and 20 percent decrease.
what is the upper circuit
Sometimes investor interest in a company increases. In such a situation, the stock price of that company starts touching the sky. In this case, an additional circuit is provided. As soon as the share price reaches a certain limit, a higher circuit will be installed on it and its trading will stop. The upper circuit also has 3 phases. It is taxed at 10 percent, 15 percent, and 20 percent.
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When did the provision of the circuit begin?
The history of the upper circuit and lower circuit in the stock market started from June 28, 2001. On the same day, the market regulator SEBI set a circuit breaker. This system was used for the first time on May 17, 2004.
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Tags: BSE, Skilled, NSE, Sensex, market share
FIRST POSTED: Feb 20, 2023 06:15 IST