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Market Intelligence › Basic Terminologies
How the upper and lower circuit mechanism works, and the truth about a trade stuck in a circuit
Published by The Retail Trader · JUL 25, 2026 · Market Basics
A circuit limit is a price band beyond which the price simply cannot go on that day. It does not force the price to stop — it only fixes the range for that day, so that a single panic or a single manipulation cannot wreck everything within one session.
Each stock's band is applied on the previous day's closing price. Some stocks have a 20 percent band, some 10 or 5 percent, and stocks that have derivatives available often run a dynamic price band that can widen during the day.
There are also market-wide circuits on the index. There, on a larger fall, the whole market is halted for some time, and on a very large fall it can even be shut for the rest of the day.
At the upper circuit there are only buyers, and at the lower circuit only sellers. This directly means:
• In a lower circuit your sell order will keep standing in the queue; there is no guarantee that it will execute.
• In an upper circuit buying is just as hard — the order goes in, but it does not get filled.
• In a stock that hits circuits repeatedly, you may not get an exit for several days.
• That is why, in an illiquid smallcap, position size is the one thing in your hands, not the exit.
Entering a circuit stock because you see it as an opportunity is the most expensive lesson. The upper circuit will take you in, but when the same stock turns around, the lower circuit will not let you out.
This article is educational only — it is not a buy or sell recommendation, it makes no claim of guaranteed returns, and it is not advice. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.