Circuit Filter in Stock & Stock Market: In today’s business, there is a strong growth of 10 to 20 percent in many small and medium stocks. The circuit filters of 302 shares listed on the National Stock Exchange i.e. NSE have changed from today. These include mostly midcap and smallcap stocks. In some stocks, the circuit filter has been increased from 10 percent to 20 percent, while in many it has been increased from 5 percent to 10 percent. After the introduction of new circuit filters, today many midcap and smallcap stocks have seen a rise of 10 to 16 per cent. Many have an upper circuit. After all, what is circuit filter and what it means for investors….
These stocks rose strongly due to changing the circuit filter
Midcap and smallcap stocks have gained momentum due to changing circuit filters. 20% in Soril Infra Resources, 20% in JP Power, 20% in Shemaroo, 20% in Kamadhunu, 20% in Geojit Finance, 20% in Jaypee Associates, 20% in JP Infra, 18% in IFCI, 18% in Suwen , 17 per cent in Ceribra Integrated Tech, 17 per cent in MEP, 16 per cent in Asiana Housing, 16 per cent in TVS Electronics and 15 per cent in SDBL. Apart from this, there are many stocks, in which 10 per cent or more are seen increasing.
What is circuit filter
This is the price limit made by the market regulator. With this it is decided that any share book can go up or down. Whenever a stock exceeds or exceeds the fixed limit, trading in that stock stops. For example, if a stock is priced at Rs 100 and the circuit filter is 10 per cent in it, then trading in that stock is stopped as soon as it goes to the price of Rs 110. Similarly, trading stops at the lower limit.
For stock instances
It is decided by the circuit limit that how much indexes like Nifty and Sensex of NSE or BSE can go up and down in a day. Among these, the filter starts at 10 per cent, 15 per cent and 20 per cent on the rise or fall. This is followed by a cooling-off period.
10 per cent circuit: If 10 per cent rise or fall comes before 1 pm, the business is stopped for one hour in the market. Business starts again after 45 minutes, after 15 minutes of pre-open session. At the same time, if it happens after 1 pm, then the business goes for 30 minutes. After 2.30 pm, the business continues when 10 per cent of the circuit is installed.
15 per cent circuit: If the 15 per cent circuit in the index comes before 1 pm, then the business is stopped for 2 hours in the market. Business stops for one hour after 15 per cent decline after 1 pm. But after 2.30 pm, if the circuit of 15 percent is installed then the business continues.
20 percent circuit: If 20 percent circuit is used in SENSEX or NIFTY then it is not started on that day. The market closes for that day and trading is started the next day.
What is the purpose of circuit filter?
The purpose of circuit filters is to prevent large turbulence, especially in the market. It is most needed at the time of volatility. The circuit filter gives market participants time to recover. This is prevented from any major rise or major fall in the stock. It can be understood that if there is any negative news about a particular company during the trading hour, then there can be a huge fall in the stock of that company. But due to the circuit filter, it can be weak within the fixed limit.