Guide · Market structure · Stage 1

Circuit limits in India: the three systems and the market-wide matrix

The short answer

"Circuit limit" is not one rule. India runs three distinct systems that most explanations blur together. An individual stock price band caps how far one scrip can move from its previous close in a day, commonly 2, 5, 10 or 20 percent. A market-wide circuit breaker halts the whole market when the Nifty 50 or the Sensex falls 10, 15 or 20 percent, with a halt duration that depends on both the level and the time of day. And dynamic price bands on derivatives scrips flex outward in steps instead of halting, so index derivatives keep trading through large moves. This page gives the exact market-wide matrix and the distinctions that decide whether you can trade at all.

This is the definitive reference. If you want the plain introduction to why the market pauses, start with the companion page on what circuit limits on the NSE are. Here we go one level deeper, because the single most common mistake in retail writing is treating a stuck-stock circuit, a whole-market halt, and a derivatives band as the same mechanism. They are not. They have different triggers, different durations, and different consequences for your order. Getting them apart is the difference between reading a halt headline correctly and panicking at it.

Three systems, not one

The word "circuit" attaches to three separate pieces of market plumbing. The first is a hard cap on a single stock. The second is a coordinated brake on the entire market. The third is a soft, self-widening band that exists precisely so the most liquid instruments almost never hard-halt. Confusing them produces most of the bad advice online, because a rule that is true for an illiquid small-cap is often false for an index heavyweight in the derivatives segment.

Three answers to the same panic. A stock band stops one name dead at its edge. A market-wide breaker freezes the whole system at 10, 15 or 20 percent index falls. A derivatives operating range does the opposite of a halt: it stretches outward so the contract keeps trading. Any guide that gives you a single "circuit rule" is describing at most one of these.

The distinction that matters. A hard circuit removes liquidity by stopping trades. A flexing band preserves liquidity by moving the limits. That is why an index heavyweight can swing hard in a session without ever locking, while a thin small-cap sits frozen on its band for hours. Same market, opposite behaviour, because they run on different systems.

System one: the individual stock price band

Every listed scrip is assigned to a daily price band, a percentage cap on how far its price can move from the previous day's close in a single session. The common bands are 2, 5, 10 and 20 percent. The assignment is rule-based, tied to the stock's category, liquidity and surveillance status, and published by the exchanges. Newly listed, illiquid or flagged scrips typically sit in the tightest 2 or 5 percent bands; more actively traded names sit in the wider 10 or 20 percent bands.

The arithmetic is simple. A stock that closed at 500 rupees in a 10 percent band can trade only between 450 and 550 rupees the next day. An order entered outside that range is rejected outright. When the price reaches the top of the band it is at its upper circuit; when it reaches the bottom it is at its lower circuit. And this is where the mechanism turns from a number into a trap.

A band is not a wall the price bounces off. It is a level at which one side of the order book disappears. At the upper circuit, the stock is as expensive as it is allowed to be today, so the book fills with buyers wanting in and no seller is willing to offer, there are only buyers and no sellers, and you usually cannot buy. At the lower circuit, the stock is as cheap as allowed, so the book fills with sellers desperate to exit and no buyer will bid, there are only sellers and no buyers, and a holder often cannot exit. The last printed price looks tradable. It is not. It is the marker of the level where two-sided trading stopped.

A circuit is a missing counterparty, not a moving price. At the lower circuit there is nobody to sell to, so a protective sell order joins the queue and sits. At the upper circuit the mirror image holds and a buy order cannot fill. Understanding this is the whole reason a stop-loss is not a guarantee.

System two: the market-wide circuit breaker and its exact matrix

The market-wide circuit breaker is the coordinated halt people usually mean by "the market has hit circuit." It is triggered when the Nifty 50 or the Sensex, whichever breaches first, moves 10, 15 or 20 percent from the previous close, computed daily and applied across the equity cash and equity derivatives segments on both exchanges at once. It responds to sharp falls; there is no equivalent market-wide halt for a sharp rise.

The part almost every summary gets wrong is that the halt duration is not fixed by the trigger level alone. It depends jointly on the level and the time of day, on the logic that an early shock needs more time for participants to re-evaluate than a late one where the close is already near. Here is the exact matrix as currently published by the exchanges.

Read down for severity, across for timing. The deeper the fall and the earlier it lands, the longer the market rests. A 10 percent fall after 2:30 pm does not halt at all; a 20 percent fall halts the day whenever it strikes. After each timed halt, a 15 minute pre-open call auction re-discovers a price before continuous trading restarts.

The exact market-wide circuit breaker matrix, Nifty 50 or Sensex versus previous close
Index fall from previous close	Before 1:00 pm	1:00 pm to 2:00 / 2:30 pm	Later
10 percent	Halt 45 minutes	Halt 15 minutes (window to 2:30 pm)	No halt after 2:30 pm
15 percent	Halt 1 hour 45 minutes	Halt 45 minutes (window to 2:00 pm)	Rest of day after 2:00 pm
20 percent	Rest of day	Rest of day	Rest of day

Two details are worth fixing in memory. First, the middle window differs by level: the 10 percent trigger runs its 15 minute halt up to 2:30 pm, while the 15 percent trigger runs its 45 minute halt up to 2:00 pm, after which it takes the day. Second, the reopening is never a bare resume. Each halt is followed by a 15 minute pre-open call auction that collects orders at many prices and reopens continuous trading from the price that matches the most volume, so the market re-discovers a level rather than lurching from a panicked last print. Because the exchanges revise these parameters periodically, treat the precise minutes as "verify current" against the live NSE or BSE circular before you rely on them.

System three: the flexing derivatives band

The third system is the one that explains why heavyweight names seem immune to circuits. Scrips that have futures and options listed on them do not use a fixed daily price band. They run a dynamic operating range, effectively a soft band set around a reference price, that does not hard-halt. When a genuine move pushes price to the edge of the range, the range flexes, it relaxes outward by a step in the direction of the move, coordinated across both exchanges, and trading continues at the wider limits.

Contrast that with system one. A cash-only small-cap that hits its 10 percent band stops. A derivatives scrip approaching its operating range gets a wider range instead. The soft band's job is to catch fat-finger and erroneous orders, not to arrest a real repricing, so a large but orderly move can proceed in steps without ever locking. For index derivatives specifically there are no day minimum or maximum price ranges of the cash-market kind; the operating-range machinery is what stands in for a circuit. The exact step size and the number of permitted flexes have been revised over time, so treat those specifics as "verify current" and read them off the exchange's price-band FAQ.

Why "no circuit" is a category, not an exemption. A derivatives scrip is not lawless. It is governed by a different, softer mechanism that trades halting for widening. The market-wide breaker still sits above all of this: when the index-level trigger fires, the whole system halts regardless of any individual contract's flexing range.

The surveillance overlays: ASM and GSM

Two frameworks are constantly mistaken for circuits and are not. The Additional Surveillance Measure (ASM) and the Graded Surveillance Measure (GSM) are surveillance overlays: they flag individual stocks showing abnormal price or volume behaviour and impose graded friction to deter speculation and manipulation. That friction can include a 100 percent margin requirement, a narrower price band, or a shift into trade-for-trade settlement, where netting is disallowed and every trade must be settled by actual delivery.

The key point is that these are orthogonal to circuits. A stock can sit inside a perfectly normal 10 percent band and simultaneously be under an ASM or GSM stage that has tightened its margin and narrowed its band. Circuits cap the daily move for everyone equally; ASM and GSM add name-specific restrictions to a flagged list. When you see a stock behaving as though it is on a tighter leash than its peers, a surveillance stage, not a circuit, is usually the reason. The stage structures and thresholds are periodically reviewed, so verify the current framework against the exchange and SEBI surveillance circulars.

How a circuit defeats your stop, and how gaps make it worse

This is the practical risk, and it is the whole reason the distinction between the systems matters to a trader rather than an examiner. A stop-loss is a trigger, not a fill. When price crosses your stop level, the system releases an order to the exchange. Whether that order executes depends entirely on there being a counterparty on the other side. A circuit is precisely the state in which that counterparty is gone.

If a stock is locked at its lower circuit, your released sell order joins a queue of sellers with no buyers to meet them. It does not fill. It waits, possibly until the circuit lifts in a later session, possibly longer, while the position stays open and the loss stays live. The stop did its job of trying to exit; the market gave it nowhere to go. For the full mechanics of why a stop cannot promise a price, see the guide on stop-loss strategy in India.

Gaps turn this from bad to worse. Prices do not move only during continuous trading. Overnight news, or a shock before the open, can make a stock gap straight to a new level, and that level can be inside a circuit. A stock can open directly on its lower circuit, jumping clean past your stop trigger before a single order can execute, so you are locked out at the worst moment with no chance to act. The interaction between overnight gaps and circuits is the sharpest edge here; the mechanics of gaps are covered in the guide on gap-up and gap-down strategy.

The compound failure. A gap opens the stock on its lower circuit. Your stop triggers but finds no counterparty. The position cannot be exited until the circuit lifts, which may be the next day at an even lower band. None of this is a broken stop; it is a stop working exactly as designed against a market with one side of its book missing. Sizing the position so you can survive that outcome is the real defence, not a tighter stop.

The three systems compared

Fix the differences on two questions: what is the scope, and does trading continue or stop. Once those are clear, the online confusion falls away.

The three circuit systems, plus the surveillance overlays, compared
System	Scope	Trigger	Action	Trading continues?
Individual price band	One stock	Move hits 2 / 5 / 10 / 20% from previous close	Stock locks at the band	No, one side of the book empties
Market-wide breaker	Whole market, both exchanges	Nifty 50 or Sensex falls 10 / 15 / 20%	Coordinated timed halt	No, then reopens via call auction
Flexing band (F&O)	Derivatives scrip	Price approaches the operating range	Range relaxes outward in steps	Yes, at wider limits
ASM / GSM overlay	Flagged individual stocks	Abnormal price or volume, surveillance criteria	Higher margin, narrower band, trade-for-trade	Yes, with added friction

The individual stock band ladder, with a surveillance note (illustrative categories)
Band	Typical scrips	Room from previous close
2 percent	Tightly watched or surveillance-flagged names	Very little; locks on a small move
5 percent	Newly listed or illiquid scrips, some flagged names	Modest daily range
10 percent	Many actively traded mid and small caps	Wider; a 500 rupee close trades 450 to 550
20 percent	Higher-band actively traded scrips	The widest fixed band
No fixed band	Scrips with futures and options listed	Dynamic operating range that flexes instead

These band categories are illustrative of how the ladder is structured, not a live classification. ASM or GSM can override the usual band for a flagged name by imposing a tighter one, which is exactly why the overlays and the circuits have to be read together rather than confused.

Why the systems exist at all

The purpose is a deliberate cooling-off. When an order book turns one-sided fast, trading harder does not help; it feeds the cascade. A pause does three things. It curbs panic, breaking the reflex where falling prices trigger more selling that triggers more falling. It raises the cost of short-lived manipulation, since a ramp cannot be sustained through a halt. And it buys time for information to disseminate, so participants can price a shock with a clearer head than the first thirty seconds allow.

The reopening design is the subtle part. Markets do not simply un-pause into the old order book. They reopen through a call auction that gathers orders across a range of prices and sets the single price that maximises matched volume. That re-discovered level, not the last frantic print before the halt, becomes the new starting point. The whole architecture, hard stock bands for idiosyncratic moves, a market-wide breaker for systemic ones, and a structured auction reopen, is what lets a market absorb a shock without a disorderly air-pocket. Knowing which system is acting, and what it does to your ability to transact, is upstream of every reaction to a halt. That kind of structural reading is exactly what the method we teach is built around.

Frequently asked questions

What are circuit limits in the Indian stock market?

Circuit limit is an umbrella term for three distinct systems. First, an individual stock price band, a daily percentage cap of commonly 2, 5, 10 or 20 percent around the previous close beyond which one stock cannot trade that day. Second, a market-wide circuit breaker, a coordinated halt of the whole market when the Nifty 50 or Sensex moves 10, 15 or 20 percent. Third, dynamic price bands on derivatives scrips that flex outward instead of halting. They solve different problems and behave differently.

What is the market-wide circuit breaker matrix in India?

The breaker fires when the Nifty 50 or the Sensex, whichever moves first, falls 10, 15 or 20 percent from the previous close. A 10 percent move halts trading for 45 minutes before 1 pm, 15 minutes between 1 pm and 2:30 pm, and does not halt at all after 2:30 pm. A 15 percent move halts for 1 hour 45 minutes before 1 pm, 45 minutes between 1 pm and 2 pm, and for the rest of the day after 2 pm. A 20 percent move stops trading for the rest of the day at any time. A 15 minute pre-open call auction follows each halt.

What is the difference between an upper circuit and a lower circuit?

Both are the edges of a stock's daily price band. At the upper circuit the stock is at its maximum allowed price for the day, so the order book fills with buyers and no seller is willing to offer, meaning you usually cannot buy. At the lower circuit the stock is at its minimum, so the book fills with sellers and no buyer will bid, meaning a holder often cannot exit. In both states one side of the book has vanished and the printed price is not a price you can transact at.

Can a stop-loss fail because of a circuit?

Yes. A stop-loss is a trigger that releases an order, not a promise of execution. If a stock is locked at its lower circuit there is no counterparty on the other side, so the released sell order simply queues and does not fill until the circuit lifts, which can be the next session or later. A gap can also open the stock directly into a circuit, jumping past your trigger before any order can execute. This is the practical risk circuits create and the reason a stop is not a guarantee.

Why do some stocks have no circuit limit?

Stocks that have derivatives, futures and options, listed on them do not use a fixed daily price band. Instead they run a dynamic operating range, effectively a soft band, that flexes outward in steps rather than halting hard. When the price approaches the range in a strong move, the range relaxes so trading continues at wider prices. This is why an index heavyweight can move sharply in a single session without ever locking at a circuit the way an illiquid small stock does.

How is a stock's daily price band decided?

The exchanges assign each scrip to a band, commonly 2, 5, 10 or 20 percent, by published, rule-based criteria tied to the stock's category, liquidity and surveillance status, not by editorial judgement. Newly listed, illiquid or flagged stocks typically sit in narrower 2 or 5 percent bands. The band is measured from the previous day's close, so a stock that closed at 500 rupees in a 10 percent band can trade only between 450 and 550 rupees the next day, and orders outside that range are rejected.

What are ASM and GSM, and are they the same as circuits?

No. ASM, the Additional Surveillance Measure, and GSM, the Graded Surveillance Measure, are surveillance overlays, not circuits. They flag stocks showing unusual price or volume behaviour and impose graded restrictions such as higher margins, narrower price bands or a shift to trade-for-trade settlement where every trade must be settled by delivery. A stock can be inside a normal circuit band and simultaneously under ASM or GSM. Circuits cap daily movement for everyone; surveillance measures add friction to specific flagged names.

Does the market-wide breaker halt derivatives too?

Yes. When the index-based market-wide circuit breaker triggers, it is a coordinated halt across the equity cash segment and the equity derivatives segment together, and it applies on both exchanges at once. That is the point of a market-wide breaker: it brakes the entire system, not one instrument. The flexing operating ranges on individual derivatives contracts, which prevent per-contract halts in normal conditions, are separate from this system-level halt and do not override it.

Why do circuit limits exist at all?

They exist to force a cooling-off when an order book turns one-sided too fast. A pause curbs panic and disorderly cascades, makes short-lived manipulation harder to sustain, and gives participants time for new information to disseminate and be priced calmly. The reopening is deliberately run through a call auction, which collects orders at many prices and finds the level that matches the most volume, so trading restarts from a re-discovered equilibrium rather than from a stale, panicked last print.

Sources

Where the facts come from

Market-wide circuit breaker levels and coordinated halt. The index-based market-wide circuit breaker applies at 10, 15 and 20 percent moves in the Nifty 50 or the Sensex, whichever breaches first, and halts the equity and equity derivatives segments together. nseindia.com
The halt-duration matrix and pre-open call auction. Halt lengths of 45 minutes, 15 minutes, 1 hour 45 minutes and rest-of-day, mapped to the 10, 15 and 20 percent levels and the 1 pm, 2 pm and 2:30 pm cutoffs, with a 15 minute pre-open session on resumption, as published by the exchanges. Verify current before relying on the exact minutes. nseindia.com
Dynamic price bands and operating-range flex for derivatives scrips. Scrips in the derivatives segment run a dynamic operating range that relaxes in steps rather than hard-halting; index derivatives have no cash-market day price ranges. Step sizes have been revised over time, so verify current. nseindia.com
Enhancement of dynamic price bands, SEBI. SEBI circular on the enhancement of dynamic price bands for scrips in the derivatives segment, May 2024, underpinning the flexing-band mechanism. sebi.gov.in
Surveillance overlays, ASM and GSM. The Additional Surveillance Measure and Graded Surveillance Measure impose graded restrictions such as higher margins, narrower bands and trade-for-trade settlement on flagged stocks, distinct from circuits; framework stages are periodically reviewed by the exchanges and SEBI. Verify current stages.

Educational note. This guide explains India's circuit and surveillance mechanisms and how they affect order execution. It is not a recommendation to trade or invest, and it is not investment advice. Regulatory parameters change; verify the current thresholds, durations and surveillance stages against the live NSE, BSE and SEBI circulars before acting. Bharath Shiksha is an educational publisher, not a SEBI-registered investment adviser or research analyst.

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