Circuit limits — also called price bands — are the highest (upper circuit) and lowest (lower circuit) price at which a stock or contract can trade on a given day. The exchange sets these limits around the previous closing price, and no order can execute above the upper circuit or below the lower circuit.
Why do exchanges set circuit limits?
Circuit limits stop a stock's price from moving too far, too fast, in a single session. They give the market time to absorb news and reduce the impact of panic buying, panic selling, or attempted price manipulation.
What percentage bands do Indian exchanges use?
In India, SEBI and the exchanges (NSE and BSE) set each stock's daily price band — most commonly 2%, 5%, 10%, or 20%. The band that applies to a particular stock is fixed for the day and is assigned on exchange criteria such as the stock's liquidity, price, and surveillance category — not by how the market moves during that session.
Securities that have derivative products (F&O) available on them do not have a fixed price band. Instead, the exchange applies a dynamic price band of 10% of the previous closing price, which is then flexed in stages based on pre-determined criteria as the price approaches the band.
For F&O contracts, a separate and tighter exchange check called Limit Price Protection (LPP) also applies to your limit orders — an order can be within the circuit band and still be rejected by LPP.
How do upper and lower circuits work?
Each stock's circuit limits are calculated from its previous closing price. Once the price touches the upper circuit, it cannot trade any higher for the rest of the session (until the exchange revises the band). The reverse applies at the lower circuit — the price cannot fall any further. You can still place buy or sell orders at the circuit price itself, but they'll only execute if a matching counter-order is available.
Important: A stock's exact band can be revised by the exchange, and F&O contracts and index-based market-wide circuit breakers follow separate rules. See the sign-off note below.
What happens to my order if a stock is stuck at its circuit?
Your order stays pending in the order book at the circuit price. If enough buyers or sellers show up before the market closes, it may get filled. If not, the order remains unexecuted and is handled per its validity — a day order expires at close, while a GTT order carries the condition forward.
Things to keep in mind
- Circuit limits reset every trading day based on the previous close.
- A stock stuck at its upper or lower circuit for several sessions in a row often has very thin liquidity — you may not be able to buy or sell even at the circuit price.
- A market-wide circuit breaker is different from a single stock's circuit limit — it's a much rarer, exchange-wide trading halt triggered when a benchmark index itself moves sharply.