Circuit Filter in Stock Market

SEBI has introduced a rule known as Circuit Breaker in the stock market for both Index and Stock specific circuit limits. The circuit filter limit is introduced with the intention to reduce the speculations in the market and stock-specific trading.

There are two ways to apply a circuit filter: Upper circuit filter and Lower circuit filter. Depending upon the increase or decrease in stock price the respective circuit filter will be applied. So when buying stocks in the current stock markets you must first learn about the stock market and know the stock market prices and then consider online trading stocks.

Index-specific Circuit Filter:

This filter applies to either Sensex or Nifty whichever is breached earlier. Now there are three filters for Index-based circuit at 10%, 15% and 20%.

• If either Sensex or Nifty falls 10% before 1:00 pm, trading halts for one hour in the market. If the index drops after 1.00 pm but before 2:30 pm, trading halts for a half-hour. If the index drops after 2:30 pm, there will be no halt for trading at a 10% level and the market would continue trading for the remaining time.
• If either Sensex or Nifty falls 15% before 1:00 pm, trading halts for two hours in the market. If the index drops after 1:00 pm but before 2:00 pm, trading halts for one hour. If the index drops on or after 2:00 pm, there will be no trading for the remaining time.
• In case of a 20% drop in either of the index, the trading halts for the remaining day.

This percentage of circuit filters are revised after every quarter and new percentages arrive for the next quarter.

Stock specific Circuit Filter:

Stock specific circuit filters are applied in both BSE and NSE index. The percentage for circuit filter limit is 2%, 5%, 10% and 20%. 

When a stock is on the upper circuit limit there will be only buyers in the market and no seller exists and hence the price is up. 

On the other hand, a lower circuit limit is when there are only sellers in the market for that stock and hence the stock price is down.

Right to Information

Every citizen has a right to know how the Government is functioning. Right to Information empowers every citizen to seek any information from the Government, inspect any Government documents and seek certified photocopies thereof. Some laws on the Right to Information also empower citizens to official inspect any Government work or to take a sample of material used in any work.

Right to Information includes the right to:
a) Inspect works, documents, records.
b) Take notes, extracts or certified copies of documents or records.
c) Take certified samples of material.
d) Obtain information in form of printouts, diskettes, floppies, tapes, video, cassettes or in any other electronic mode or through printouts.

"information" means any material in any form, including records, documents, memos, e-mails, opinions, advice, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force.

"record" includes:
a) Any document, manuscript and file
b) Any microfilm, microfiche, and facsimile copy of a document
c) Any reproduction of image or images embodied in such microfilm (whether enlarged or not); and
d) Any other material produced by a computer or any other device;

An applicant cannot ask for opinions/advice/views under the RTI Act unless the opinion/advice/view is already on "record".

However, under Section 4(1)(d), an applicant can ask for "reasons" behind an administrative or quasi-judicial decision of a public authority, especially if he is an "affected person".

Click here to lodge your complaint.