Glossary
What is Circuit Limit? Meaning, Example & Why It Matters
The maximum percentage a stock or index can rise or fall in a day before trading is restricted or halted.
A circuit limit, also called a price band, is the range within which a stock can trade on a given day. Exchanges set these bands for many stocks to curb excessive volatility. If a stock hits its upper circuit, there may be only buyers and few sellers; at a lower circuit, there may be only sellers and few buyers.
Why Circuit Limit matters to you
Index-level circuit breakers also exist. If a benchmark index falls or rises sharply by set thresholds, trading across the market can be halted temporarily. These are rare but important to understand during major market events.
Circuit limits affect your ability to exit. If you hold a stock stuck at its lower circuit, you may not be able to sell at all until buyers return, which can mean losses grow over several days. This liquidity risk is especially common in small and illiquid stocks, where bands tend to be tighter and are revised frequently.
Practical tip: check the current price band of a stock before trading, especially in small caps. Exchanges revise bands regularly, so rely on the exchange website or your broker's quote screen rather than old information.
See it in rupees: every charge and tax on a real trade, at every broker. Open the brokerage calculator
Related terms
- GlossaryLimit Order
An order to buy or sell only at a specified price or better, giving you control over the execution price.
- GlossaryMarket Order
An order to buy or sell immediately at the best price currently available in the market.
- GlossarySlippage
The difference between the price you expected for a trade and the price at which it actually executed.
Frequently asked questions
Do all stocks have circuit limits?
Many stocks have daily price bands, but stocks that trade in the F&O segment are often handled differently, with dynamic price bands.
Can I sell a stock stuck at the lower circuit?
You can place a sell order, but it will only execute if there is a buyer at that price, which may not happen.
Who decides the circuit limit?
Stock exchanges set and revise price bands based on SEBI guidelines and their surveillance systems.