Re: Achiievers Equities Ltd
But under what circumstances do the circuit limits change? On what basis does the exchange exactly regulate the circuit. As clearly the stock was not put into circuit limits when it crashed on news that they were involved in the bribery case. That day it crashed 18%
Hi,
As you would have observed , stock prices can move up or down due to a number of reasons. For example – earnings results, government policies, trends in the industry etc. Such prices movements are reasonable and logical.
But in some cases, stock prices may move up or down drastically, accelerated mostly due to fear or greed by speculators and manipulators. Such movements are harmful for the stock markets.
In order to control such heavy price fluctuations, stock exchanges have a system called ‘circuit breakers’, something that works similar to the electricity circuit breakers that we have at home.
Circuit breakers were first introduced in the trading system of Indian stock exchanges back in 1992 at the BSE. There are separate circuit breakers for the indices and individual stocks.
These control systems ensure sanity of the stock market and protects investors. These are also called circuit limits or price bands.
Stock specific circuit filters are applied in both BSE and NSE index; the percentage for circuit filter limit is 2%, 5%, 10%, 20%. Not all stocks fall in the circuit limit category. There are stocks to which circuit limits are not applicable.
For newly listed companies, there is a circuit limit of 20% from the issue price.
That’s about circuit limits..
….have a nice day !!