Circuit Limits & Stock Freezes | Telugu Trading Guide

Introduction

Circuit Limits అంటే stock prices extreme movements రాకుండా protect చేసే SEBI safety mechanism. ఒక్క రోజులో stock ఎంత percentage move అవ్వగలదో limit పెట్టడం. FinViraj.com లో market regulations detailed గా తెలుసుకోవచ్చు! 🚫📊

What are Circuit Limits?

Circuit Limits అంటే ఏమిటి? 🔒

Individual stocks రోజుకు maximum ఎంత percentage move అవ్వగలవో fix చేసిన boundaries. Limits cross అయినప్పుడు trading halt అవుతుంది.

Types:

• Upper Circuit: Maximum price పెరుగుదల limit
• Lower Circuit: Maximum price తగ్గుదల limit

Purpose: Market manipulation prevent చేయడం, investors protection.

SEBI Circuit Categories

Stock-wise Limits 📊

Large Cap Stocks: ±20% daily limit (Reliance, TCS, HDFC Bank)

Mid/Small Cap: ±10% లేదా ±5% limit

Special Cases:

• New listings: ±5% first day
• SME stocks: ±5% daily
• Penny stocks: ±2% to ±5%

Market-wide Circuits 🎯

Index Level Halts:

• 10% decline = 15-minute halt
• 15% decline = 45-minute halt
• 20% decline = Trading stopped

How Circuits Work

Upper Circuit Hit 📈

Stock previous close + circuit percentage వద్ద trading stops. Only sell orders allowed, buy orders రావు.

Example: Stock ₹1000, 20% circuit = ₹1200 వద్ద freeze.

Lower Circuit Hit 📉

Stock previous close – circuit percentage వద్ద halt. Only buy orders allowed, sell orders రావు.

Example: Stock ₹1000, 20% circuit = ₹800 వద్ద freeze.

Trading Impact

Day Traders 📱

Upper Circuit: Can’t exit long positions, can’t buy fresh

Lower Circuit: Can’t exit short positions, can place buy orders

Long-term Investors 💼

Benefits: Protection from extreme moves, manipulation prevention

Challenges: Liquidity constraints, can’t exit when needed

Circuit Trading Strategies

Pre-Circuit Planning 🔍

Watch For:

• Major news announcements
• Results day expectations
• Technical breakout levels
• Sector policy changes

Response Strategy 🎯

Upper Circuit Hit:

• Holding stocks: Enjoy the move
• Want to buy: Wait for next day
• Use options for hedging

Lower Circuit Hit:

• Strong stocks: Consider buying
• Holding positions: Plan next move
• Avoid panic decisions

Circuit Calculation

Formula: Circuit Price = Previous Close × (1 ± Circuit %/100)

Example:

• Stock: ₹500 previous close
• 20% circuit
• Upper: ₹500 × 1.20 = ₹600
• Lower: ₹500 × 0.80 = ₹400

Risk Management

Smart Positioning 💰

Position Sizing: Smaller positions in circuit-prone stocks

Diversification: Spread across multiple stocks

Alternative Tools: Use derivatives when stocks frozen

Monitoring Tools 📱

Platforms:

• NSE/BSE websites: Real-time data
• Zerodha Kite: Circuit alerts
• TradingView: Pre-market calculations

Common Scenarios

Results Day Circuits 📊

Positive Results: Upper circuits common

Negative Surprise: Lower circuits hit

Strategy: Pre-results planning essential

News-driven Circuits 📰

Bonus/Split News: Upper circuit hits

Regulatory Issues: Lower circuit possible

Takeover News: Target company upper circuit

Conclusion

Circuit Limits investor protection కోసం designed, కానీ traders కి challenges create చేస్తాయి. Understanding rules మరియు smart planning తో navigate చేయవచ్చు! 🛡️

Key Points:

• Large cap: ±20%, Small cap: ±5-10%
• Upper circuit = only selling, Lower circuit = only buying
• Pre-planning essential for circuit scenarios
• Use derivatives for hedging frozen stocks

Smart Approach: Circuit respect చేసి patient ga trade చేస్తే success possible! 💪

మరిన్ని trading rules కోసం FinViraj.com follow చేయండి! 📖✨