Circuit Breaker
An automatic trading halt triggered when an index or a security moves beyond a preset percentage from a reference price.
Formula
Trigger: index movement of 10%, 15% or 20% from the previous close, with halt duration depending on the level and the time of day
Unit
%
In depth
Market-wide circuit breakers halt all equity and derivative trading to interrupt a cascade and give participants time to process information — the theory is that panic is partly a coordination failure that a pause can break. Individual securities have their own price bands, which is a different mechanism with a different purpose. Critics argue that halts do not remove selling pressure but merely delay it, and can even accelerate it as traders rush to exit before a halt. What a circuit breaker never does is establish that a price is right or wrong.
Worked example
A 10% index fall before 13:00 triggers a 45-minute halt; the same fall after 15:00 triggers no halt at all, because the session is nearly over. The rule is a schedule, not a judgement about the fall itself.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Circuit Breaker” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.