What Is Circuit Breaker | Information Related To Circuit Breaker In Stock Market

What Is Circuit Breaker: The share market has special importance in all countries, according to the share market, the economy of that country makes a difference. In the stock market, in some emergency time, a circuit breaker is generated, such circuit breaker as we hear for electricity, similarly it happens in this too. According to this breaker, the stock market stops for some time. Similarly, an emergency situation of coronavirus has arisen in the world, due to which the stock market and economy of the whole world are seen to be affected.

Because of this, circuit breakers are used to curb abnormal fluctuations in the stock market. Circuit breakers are prescribed for both stocks and indices. If you also want to know about Circuit Breaker in Stock Market, then here information is being provided about what is Circuit Breaker, What is Circuit Breaker in Stock Market.

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What Is Circuit Breaker In Stock Market

There are mainly two types of circuit breakers in the stock market. The first is the upper circuit and the second is the lower circuit. The upper circuit is used in the stock market when it rises more than a certain limit. The country’s SEBI body has set 3 limits for the use of the upper circuit. The first limit is 10 percent, the second limit is 15 percent and the third or final limit is 20 percent.

Apart from this, when the stock market starts declining more than a certain limit, then in such a situation a lower circuit is implemented. SEBI has also set three limits for this, first 10 percent, second 15 percent, and last 20 percent.

Why The Need For A Circuit Breaker

There was a need to install circuit breakers when the stock market increased or decreased beyond a limit, which was started by SEBI in 2001. Its main purpose is to control the huge volatility in the stock market.

Rule Of Circuit Breakers

There is also a rule to implement circuit breakers in the stock market. If we talk according to the website of NSE India, then before 1 pm, if the stock market sees an increase of 10 percent or if the stock market sees a decline only by such percentage, then circuit breakers (Circuit Breakers) Under ) the rule of upper circuit or lower circuit is applied.

In this case, trading can be stopped for 45 minutes. But if after 1 pm there is a rise or fall of 10 percent, then trading is stopped for only 15 minutes. Similarly, rules have been made for 15 and 20 percent. To get more information about circuit breakers, one can visit the NSE website at https://www.nseindia.com/.