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What a circuit filter is, what upper circuit and lower circuit mean, and trading halt rules — a complete guide.
Published by The Retail Trader · AUG 03, 2026 · Features
What a circuit filter is, what upper circuit and lower circuit mean, and trading halt rules — a complete guide.
A circuit filter is a price limit set by the stock exchange. If a stock's price moves too far up or down in a single day, trading is temporarily halted.
Keep these four points in mind:
• What happens — Upper Circuit: Price went to the maximum upside, Lower Circuit: Price went to the maximum downside
• Trading — Upper Circuit: Only buyers, no sellers, Lower Circuit: Only sellers, no buyers
• Implication — Upper Circuit: Stock may rise further, Lower Circuit: Stock may fall further
• Next day — Upper Circuit: Gap up possible, Lower Circuit: Gap down possible
Keep these five points in mind:
• Large cap (Nifty 50) — 20%
• Mid cap — 10-20%
• Small cap — 5-10%
• Newly listed — No circuit (first day)
• SME stocks — 5-10%
Upper Circuit:
• The stock price touches the upper limit
• A trading halt kicks in (or an auction session)
• There are only buyers, no sellers
• If you hold the stock — hold on (it may rise further)
• If you want to buy — place your order and wait for it to match
Lower Circuit:
• The stock price touches the lower limit
• A trading halt kicks in
• There are only sellers, no buyers
• If you hold the stock — selling is difficult (you won't find buyers)
• Don't panic — a recovery is possible the next day
Exit before the circuit hits. A stop loss protects you.
Circuits hit more often in low-liquidity stocks. Prefer high-volume stocks.
Circuits usually hit after news — earnings, SEBI action, a promoter change.
If a stock keeps hitting circuits regularly, avoid it — it may be operator driven.
Keep these three points in mind:
• Trigger — Circuit Filter: Price limit hit, Trading Halt: Corporate announcement
• Duration — Circuit Filter: Intraday or next day, Trading Halt: 15 min - few hours
• Purpose — Circuit Filter: Price stability, Trading Halt: Information dissemination
Keep these points in mind:
• 📌 CIRCUIT FILTER
• 📊 Upper circuit — Price at max upside, only buyers
• 📊 Lower circuit — Price at max downside, only sellers
• 📊 Large cap: 20%, Small cap: 5-10%
• UPPER CIRCUIT:
• 📊 Trading halt, only buyers
• 📊 Stock may rise further
• 📊 If you hold → wait for next day
• LOWER CIRCUIT:
• 📊 Trading halt, only sellers
• 📊 Selling is difficult (no buyers)
• 📊 Don't panic, wait for recovery
• TIPS:
• ✅ Place a stop loss
• ✅ Prefer high liquidity stocks
• ✅ Follow the news
• ❌ Avoid operator-driven stocks
Keep these points in mind:
• What Is the Stock Market? | Stop Loss Guide | Stock Market Scams India
The Retail Trader — educational market analysis. Not investment advice.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory in any way. Rules, rates and mechanics change from time to time at the exchanges, SEBI and the RBI, so verify every number yourself with your broker or an official source.