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Trading Halt: What Are Market Wide Circuit Breakers?

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On Monday, for the second time in two weeks, trading in Indian markets was temporarily halted for 45 minutes after a sharp plunge in stock prices. BSE's Sensex crashed 10% in trade as over 75 districts and major cities in India were locked down to curb the spread of coronavirus. Confirmed COVID-19 cases have now surpassed 400 in the country.

Previously on 13 March, trading was temporarily halted for the first time in 12 years, after a sharp fall in the benchmark indices. It was the first time since 2008 that trading had to be halted as the index-based market-wide circuit breaker system was triggered.

Trading Halt: What Are Market Wide Circuit Breakers?
 

When is the circuit breaker triggered?

According to NSE's website, "the index-based market-wide circuit breaker system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%."

These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by the movement of either the BSE Sensex or the Nifty 50, whichever is breached earlier.

On 23 March, the trading was halted after Sensex was down 2,991 points or 10 percent while Nifty 50 was fell 9.6 percent.

Circuit breakers are also seen for individual stocks when these are safeguards set to prevent large moves in the stock in a very short time. When the price changes above or below the limit, trading is halted on the stock.

Duration of the trading halt and pre-open session

At the trigger limit of 10%

Trigger time Market halt duration Pre-open call auction session post-market halt
Before 1 pm 45 Minutes 15 Minutes
At or after 1:00 pm up to 2:30 pm 15 Minutes 15 Minutes
At or after 2:30 pm No halt Not applicable

At the trigger limit of 15%

Trigger time Market halt duration Pre-open call auction session post-market halt
Before 1 pm 1 hour 45 minutes 15 Minutes
At or after 1 pm before 2 pm 45 Minutes 15 Minutes
On or after 2 pm Remainder of the day Not applicable

At the trigger limit of 20%

Trigger time Market halt duration Pre-open call auction session post-market halt
Any time during market hours Remainder of the day Not applicable
Read more about: sensex nifty trading nse bse
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