Circuit Filter - Threshold limit

Circuit Filter - Threshold %

To prevent extreme volatility and protect investors.

In India, the stock market has circuit breakers in place to prevent extreme volatility and protect investors. These circuit breakers are thresholds set by the Securities and Exchange Board of India (SEBI) and are based on the movement of the benchmark indices like the S&P BSE Sensex and the Nifty 50.

There are 3 stages in a single trading day.

The circuit breakers are triggered at three stages: 10%, 15%, and 20% movement (either upward or downward) of these indices in a single trading day.

Here's how it works:

10% Trigger

If the market drops by 10% before 1:00 PM, trading is halted for 45 minutes.

If the market drops by 10% between 1:00 PM and 2:30 PM, trading is halted for 15 minutes.

If the market drops by 10% after 2:30 PM, trading continues without any halt.

15% Trigger

If the market drops by 15% before 1:00 PM, trading is halted for 1 hour 45 minutes.

If the market drops by 15% between 1:00 PM and 2:00 PM, trading is halted for 45 minutes.

If the market drops by 15% after 2:00 PM, trading is halted for the remainder of the day.

20% Trigger

If the market drops by 20% at any time during the trading day, trading is halted for the remainder of the day.

These measures are designed to prevent panic selling and to allow time for dissemination of information and rational decision-making by investors. Therefore, the maximum percentage drop the Indian stock market can have in one day, resulting in a complete trading halt for the day, is 20%.