Guide · Market structure
What are circuit limits on the NSE and BSE?
The short answer
Circuit limits are exchange-imposed boundaries on how far a price may move, built to contain panic and manipulation. The word hides three separate systems that people constantly conflate. Individual-security price bands cap a single stock's daily move, commonly at 2, 5, 10 or 20 percent. The market-wide circuit breaker halts the entire market when the Nifty 50 or the Sensex moves 10, 15 or 20 percent. Dynamic price bands set a flexing operating range for derivatives. Each bounds a different thing, in a different way.
Almost every confusion about circuits comes from treating them as one rule. They are not. A small-cap frozen at its 5 percent upper band, a nationwide halt when an index falls 10 percent, and a Nifty future trading inside a band that widens through the day are three unrelated mechanisms that happen to share a nickname. This guide separates them cleanly, states the exact market-wide halt matrix from the exchange, and then does the part most explanations skip: why a locked circuit means your order cannot fill even when your trigger was perfect, and what that forces on how you size a position.
Three systems, not one
Start by separating what each mechanism actually bounds. One governs a single stock. One governs the whole market. One governs an instrument that already has derivatives on it. They do not substitute for each other, and a security can be touched by more than one at once.
Individual-security price bands
Every cash-segment stock is assigned a daily price band: a percentage of the previous close beyond which it may not trade that session. The common tiers are 2, 5, 10 and 20 percent, and the exchange assigns each stock a band by its liquidity and surveillance profile, not its size alone. The band is recomputed daily against the last close, and orders placed outside it are simply rejected by the system.
A crucial exception: securities on which derivatives are available carry no fixed daily price band. They are held instead by the dynamic operating range and by market-wide limits, discussed further down. A subtle consequence trips people up: a stock that is only a constituent of an index but has no derivatives of its own still gets an ordinary daily band. So "index stock" does not automatically mean "no circuit"; having its own listed derivatives does.
The two edges of the band have names. The upper circuit is the ceiling; the lower circuit is the floor. What matters is not the label but what happens at the edge, and this is the single most important mechanic on the page.
The market-wide circuit breaker: the exact matrix
The second system is entirely different in scope. The index-based market-wide circuit breaker halts trading across all equity and equity-derivative markets at once, nationwide, when a benchmark index makes an extreme move. It is triggered by a move in either the Nifty 50 or the BSE Sensex, whichever breaches first, measured from the previous day's close, and it applies at three thresholds: 10, 15 and 20 percent. The halt is coordinated across both exchanges, so the market cannot simply migrate to the other venue.
The part that most sources get vague about is the duration, because it is not a single number. The length of the halt depends on both the threshold breached and the time of day it is breached. Earlier in the session the market can afford a long pause; late in the session a breach either halts briefly or ends the day. This is the authority core of the topic, so here it is exactly.
| Index move from previous close | Before 1:00 pm | 1:00 pm to 2:00 / 2:30 pm | After 2:00 / 2:30 pm |
|---|---|---|---|
| 10 percent | 45-minute halt | 15-minute halt (1:00 to 2:30 pm) | No halt (after 2:30 pm) |
| 15 percent | 1 hour 45-minute halt | 45-minute halt (1:00 to 2:00 pm) | Rest of the day (after 2:00 pm) |
| 20 percent | Rest of the day | Rest of the day | Rest of the day |
Why this dates most articles. Many explainers give only "10, 15, 20 percent" and stop, or quote one halt length as if it were fixed. The duration is a function of two variables, threshold and time of day, and the after-2:30 pm exemption on the 10 percent tier is routinely omitted. A source that states a single halt time is describing one cell of a nine-cell grid.
Dynamic price bands for derivatives
The third system exists because a hard daily freeze does not suit instruments that must track a fast-moving underlying. For securities in the derivatives segment, and for the futures and options themselves, the exchange applies a dynamic price band, an operating range that starts around a set percentage of the previous close and flexes wider when the instrument presses persistently against one edge. Rather than slamming shut, the band relaxes in controlled steps after a brief pause, so a genuine trend can continue while a single erroneous spike is still refused.
This is why an index future can keep moving on a day a small-cap is frozen at its band: the future is governed by a range that widens, not a wall that holds. There is a separate execution-level bound that sits on top of this for derivatives, Limit Price Protection, which rejects an individual limit order priced too far from a live reference value. That order-validation mechanism, and how it interacts with a released stop, is covered in the stop-loss execution guide rather than repeated here.
The surveillance overlay: ASM and GSM
On top of the three price mechanisms sits a surveillance layer that tightens the rules on specific flagged stocks. It is not a fourth kind of circuit; it is a set of measures that change a stock's bands, margins and even how often it may trade. Two frameworks matter, run by the exchanges under the SEBI surveillance framework.
The Additional Surveillance Measure (ASM) targets securities showing unusual behaviour: sharp short-term and long-term price swings, heavy concentration among the top clients, volume far above the historical average. Once flagged, a stock can face a 100 percent margin requirement, a narrowed price band, periodic call auctions in place of continuous trading, and a shift to trade-for-trade settlement where intraday netting is disallowed. The intent is to make a stock that is being pushed harder and more expensive to push.
The Graded Surveillance Measure (GSM) is aimed at securities whose price looks disconnected from any fundamental basis, and it escalates through stages. An early GSM stage typically imposes a 100 percent margin and a price band of 5 percent or lower; higher stages restrict trading to once a week and demand an additional surveillance deposit from the buyer worth a large fraction of the trade value, held for months. As a stock climbs the GSM ladder, its circuit tightens and its cost of entry rises together.
What the overlay changes for you. A stock under ASM or GSM does not behave like a normal name. Its band may be tighter than the tier you expected, its margin far higher, and its trading may be reduced to a periodic auction, so a position can be far harder to build or exit than the headline percentage suggests. Before trading anything unfamiliar, check whether it sits on an ASM or GSM list, because the surveillance stage, not the default band, is what actually governs it.
The three systems compared
Held side by side, the mechanisms stop overlapping in the mind. The test is always the same two questions: what does it bound, and who does it apply to.
| System | What it limits | Who it applies to | Behaviour at the edge |
|---|---|---|---|
| Individual price band | A single stock's daily move, at 2, 5, 10 or 20 percent of the previous close | Cash-segment stocks without their own derivatives | Hard lock: one-sided book, no trade until revised |
| Market-wide breaker | The whole market, on a 10, 15 or 20 percent index move | All equity and equity-derivative markets, both exchanges | Timed halt, then a pre-open call auction |
| Dynamic price band | One derivative's intraday range, starting near a set percentage | F&O contracts and securities in the derivatives segment | Flexes wider on sustained pressure; does not freeze hard |
| ASM / GSM overlay | Bands, margins and trading frequency on flagged names | Stocks flagged for volatility, concentration or price dislocation | Tightens the above: 100% margin, narrower bands, call auctions |
What circuits mean for a trader
All of this converges on one practical truth: you can be trapped in a position you cannot exit. A circuit is a liquidity event before it is a price event. If a stock you hold locks at its lower circuit, the loss on your screen is not a loss you can realise, because there is no buyer at the floor; you wait, and the fill you eventually get when the lock breaks can be materially worse than the level you saw. Band-prone small-caps make this acute by locking circuit after circuit, gapping down each session before you get a chance to act.
Gap-and-circuit risk compounds. An overnight or event-driven gap can open the price straight into a circuit, so the market jumps clean over your intended exit and then freezes beyond it. Your stop-loss never got a fair chance to work: the trigger may fire, but the released order has no counterparty at the lock, so it sits and waits. This is the same no-counterparty failure the stop-loss execution guide sets out in full, and it is why a stop is an attempt to exit, never a guarantee of one.
The correct response is not to fear circuits but to size for them. Position size has to assume that on your worst day you cannot always get out at your level, or at all, until a lock lifts. A position small enough that a gap-through-circuit outcome is survivable is a position that respects how the plumbing actually works. Building that assumption into the size, rather than trusting the exit, is exactly the discipline that the method we teach is built around. The circuit is not the enemy; assuming it will never fire is.
Common Questions
Frequently Asked Questions
What are circuit limits on the NSE and BSE?
+Circuit limits are exchange-imposed boundaries on how far a price may move, meant to contain panic and manipulation. They are three separate systems people conflate. Individual-security price bands cap a single stock's daily move, commonly at 2, 5, 10 or 20 percent. The market-wide circuit breaker halts the whole market when the Nifty 50 or the Sensex moves 10, 15 or 20 percent. Dynamic price bands set a flexing operating range for derivatives. Each bounds a different thing.
What is an upper circuit and a lower circuit?
+The upper circuit is the highest price a stock may trade at that day, and the lower circuit is the lowest, each set as a percentage of the previous close. When a stock reaches its upper band it is locked at the upper circuit: buy orders keep arriving but no one will sell at the cap, so no trade occurs. At the lower circuit the mirror holds, sellers stack up with no buyers. The stock can sit frozen with orders queued and the price unable to move further that session.
Can I sell at the upper circuit or buy at the lower circuit?
+Usually not, and the reason is structural. At the upper circuit there are only buyers and effectively no sellers at the cap, so a buy order has no counterparty and cannot fill. At the lower circuit there are only sellers and no buyers at the floor, so a sell order cannot fill however urgent it is. A trade needs two sides, and at a locked circuit one side is absent. This is exactly why a stop-loss cannot execute at a circuit lock, covered in the stop-loss guide.
What is a market-wide circuit breaker and when does trading halt?
+It halts every equity and equity-derivative market at once when the Nifty 50 or the BSE Sensex moves 10, 15 or 20 percent from the previous close, whichever index breaches first. The halt length depends on the threshold and the time of day. A 10 percent breach before 1pm halts 45 minutes; between 1pm and 2:30pm, 15 minutes; after 2:30pm, no halt. A 15 percent breach before 1pm halts one hour 45 minutes; between 1pm and 2pm, 45 minutes; after 2pm, the rest of the day. A 20 percent breach halts trading for the rest of the day at any time. Trading resumes with a pre-open call auction.
Do index stocks and F&O stocks have daily circuits?
+Securities on which derivatives are available carry no fixed daily price band; instead they trade within a dynamic operating range that flexes intraday and are held by the market-wide breaker and other limits. A stock that is only part of an index but has no derivatives of its own still gets a normal daily price band. So a fixed 5 or 10 percent daily circuit is a cash-segment feature. Large, actively traded F&O names are governed by a flexing band, not a hard freeze.
What are ASM and GSM?
+They are surveillance frameworks that tighten the rules on flagged stocks. The Additional Surveillance Measure (ASM) targets names showing unusual price swings or client concentration; it can impose 100 percent margin, narrower price bands, periodic call auctions and a move to trade-for-trade settlement. The Graded Surveillance Measure (GSM) escalates through stages for securities whose price looks disconnected from fundamentals, starting with a 100 percent margin and a price band of 5 percent or lower and rising to weekly-only trading with a large additional surveillance deposit. Both make a stock harder and costlier to trade.
Why did my stop-loss not trigger at a circuit?
+It very likely did trigger; it simply could not fill. When a stock is locked at its lower circuit there are sellers stacked at the band but effectively no buyers, so your released sell order joins a queue with no counterparty and cannot execute until the lock breaks. The trigger firing does not create a buyer. The order can then fill far below your intended level when trading resumes. This no-counterparty failure is one of several a stop faces, set out in the stop-loss guide.
How do circuit limits affect intraday trades?
+A locked circuit can trap an intraday position you cannot exit that session, so a paper loss on screen may not be one you can realise until the lock lifts, potentially at a worse price. Band-prone small-caps can move circuit to circuit, and a gap that opens straight into a circuit compounds the problem by skipping your exit entirely. The practical consequence is that intraday size must assume you cannot always get out, not that you always can.
What happens when trading resumes after a halt?
+After a market-wide breaker, trading does not simply switch back on at the last price. It reopens with a pre-open call auction: orders are collected over a window and matched at a single equilibrium price that clears the largest volume, so a fair reopening level is discovered before continuous trading restarts. At an individual-stock circuit, trading resumes when the exchange revises the band or the lock breaks, again typically through a call-auction mechanism rather than an instant free-for-all.
Where the facts come from
Sources
- Index-based market-wide circuit breaker. NSE documents the 10, 15 and 20 percent thresholds triggered by the Nifty 50 or BSE Sensex, whichever breaches first, the coordinated nationwide halt, the halt durations by time of day, and the resumption via a pre-open call auction. Establishes the exact market-wide matrix. nseindia.com
- Price bands and the dynamic operating range. NSE applies daily price bands to cash-segment securities (commonly 2, 5, 10 or 20 percent), rejecting orders beyond them, exempts securities with listed derivatives from a fixed band, and applies a dynamic operating range to the derivatives segment that flexes intraday. Establishes the individual-band and dynamic-band mechanics. nseindia.com
- ASM and GSM surveillance frameworks. The exchanges, under the SEBI surveillance framework, operate the Additional Surveillance Measure (unusual price or concentration, up to 100 percent margin, narrowed bands, call auctions, trade-for-trade) and the staged Graded Surveillance Measure (from a 5 percent band and 100 percent margin to weekly trading with an additional surveillance deposit). Establishes the surveillance overlay. nseindia.com
- Stop execution at a circuit lock. The no-counterparty behaviour of a locked band, and the released-order lifecycle it defeats, is detailed in the companion stop-loss execution guide, which this page links rather than duplicates.
Educational note. This guide explains how circuit limits, price bands and market surveillance work on Indian exchanges. It is not a recommendation to trade or invest, and it is not investment advice. Bharath Shiksha is an educational publisher, not a SEBI-registered investment adviser or research analyst.