Circuit breaker
Also called: market-wide circuit breaker, trading halt, index circuit
A rule that halts all equity trading for a set time when the Nifty 50 or Sensex moves by a very large set percentage in a day.
Market-wide circuit breakers stop trading in all shares and equity derivatives across the country when a major index moves sharply. How long the halt lasts depends on the size of the move and the time of day, and trading restarts with a pre-open call auction.
A halt slows panic and gives time to absorb news. It does not stop prices from moving further once trading restarts.
Example
Suppose the first trigger level is a 10% move. If the Nifty 50 closed at 22,600, a fall of 2,260 points would halt trading for the time the exchange's rules set.
Learn more in these lessons
- Circuit breakers and price bandsWhat is a circuit breaker in the stock market?
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