What is the meaning of Lower and Upper circuit? | share market | Lower and Upper Circuit- Watch Video

is often seen that on some day when the market goes up rapidly, the purchase of some shares is stopped. This situation also happens in fast down stocks. We have often heard from stock market experts that today this stock has hit the circuit. Do you know what these circuits are and what is its importance in the stock market.

What is circuit?

To protect investors from sudden movements in the price of a share, exchanges impose a band on the price of a share based on the previous day's share prices. This band can be 5% or 2% of the previous day's price. This keeps the share price in the middle of that band. Then no matter how much the market goes up or down. This band is called circuit. These circuits are of two types – Upper Circuit and Lower Circuit.