The circuit filter of a stock is revised based on liquidity, volatility, and trading activity. If a stock exhibits stable trading behaviour, the NSE may increase its circuit limit from 5% to 10%, 10% to 20%, and so on.
Criteria for Increasing Circuit Filter (5% → 20%)
- Consistent Trading Volume & Liquidity
- If a stock shows steady trading volumes without erratic price movements, NSE may increase the circuit limit.
- Low Volatility Over a Period
- If a stock has a 5% circuit and trades within limits without frequently hitting the upper or lower circuit, the limit may be expanded to 10% or 20%.
- Periodic Review by NSE
- NSE reviews circuit filters regularly (usually monthly or quarterly) and adjusts them based on stock performance.
- Exit from Surveillance Measures
- Stocks under ASM (Additional Surveillance Measure) or GSM (Graded Surveillance Measure) may have a lower circuit (like 5%).
- If a stock exits surveillance, its circuit may be widened to 10% or 20%.
- Stock Moving Out of T2T (Trade-to-Trade) Segment
- Stocks in the T2T segment have tighter circuit limits, typically 5%.
- If moved to regular trading, the circuit can be expanded to 10% or 20% of its current capacity.
- Corporate Actions & Reclassification
- After events like bonus issues, stock splits, rights issues, the exchange may reassess the circuit filter.
Example of Circuit Change (5% → 20%)
- Suppose a stock trading at ₹100 has a 5% circuit limit (₹95 - ₹105 range).
If NSE increases the limit to 20%, the new range becomes ₹80 - ₹120, allowing more price movement.
