Lower Circuit
The state in which a security is trading at the bottom of its permitted price band, with sell orders pending and no buyers.
Formula
Lower Circuit Price = Previous Close x (1 - Band %)
Unit
₹
In depth
A lower-circuit lock is the practical demonstration that a stop-loss guarantees nothing: the trigger has long since passed, but no buyer exists at the band price, so the exit does not execute. Holders can be trapped for consecutive sessions while the price steps down the maximum each day. This is the mechanism behind the largest retail losses in small-caps, where thin free float and a tight band combine. The lesson is a sizing lesson — the risk of a position must be assessed on the assumption that the exit may be unavailable, not merely expensive.
Worked example
Holding 10,000 shares bought at ₹200 in a stock hitting the 5% lower circuit for four straight sessions: 200 to 190 to 180.50 to 171.48 to 162.90. The loss is 18.5% and not a single share has been sold.
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 “Lower Circuit” 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.