What Are Circuit Limits (Price Bands) in the Stock Market?

A circuit limit (or price band) is a cap on how far a stock's or index's price can move in a single trading day. It's a safety mechanism to curb extreme volatility and give the market time to cool down.

Upper and lower circuits

If a stock rises by its band limit, it hits the upper circuit and can't trade higher that day; buyers queue up with no sellers. If it falls by the limit, it hits the lower circuit, with sellers and no buyers. Common individual-stock bands are 2%, 5%, 10%, or 20%, set by the exchange based on the stock's profile.

Index-level circuit breakers

Market-wide circuit breakers halt all trading if a benchmark index (NIFTY / SENSEX) moves 10%, 15%, or 20% in a day, with halts of increasing length. These are rare and reserved for severe shocks.

What it means for you

A stock stuck at a circuit can be impossible to buy or sell at that price because there's no one on the other side. Thinly traded small caps hit circuits more often. It's one reason market cap and liquidity matter when you pick stocks.