CL Educate listed on Friday at Rs 402 down sharply by 20% from its issue price of Rs 502 per share, but soon after listing, it was also in the upper circuit, many investors wanted to buy but were unable to.
So what is this circuit which prevented the new investors to enter on Friday after tepid listing of the shares ??
Circuit breaker was introduced by SEBI to protect the interest of investors. Once the stock or index hits the circuit, it halts further trading in the stock/index either for a number of hours or for a day.
Circuit breaker can be applied to entire index ( Sensex /Nifty etc) and to stocks also. For index based circuit filters are at 10 %, 15%, 20% and stocks it varies from 2%, 5%, 10% and 20%.
An upward movement over the threshold will cause stock / index to enter an upper circuit, similarly a downward movement will cause stock / index to enter a lower circuit.
Further circuit breakers are not applied to stocks on which derivative products are available (which are traded in Future and option market).
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