The exchanges implement on a quarterly basis the index based market wide circuit breaker system. The system is applicable at three stages of the index movement either way at 10%, 15% and 20%. This circuit breaker brings about a coordinated trading halt in all equity and equity derivative markets nationwide.
The market wide circuit breakers would be triggered by movement of either SENSEX or the NSE S&P CNX Nifty whichever is breached earlier.
In case of a 10% movement of either of these indices, there would be a 1-hour market halt if the movement takes place before 1 p.m. In case the movement takes place at or after 1 p.m. but before 2.30 p.m. there will be a trading halt for ½ hour. In case the movement takes place at or after 2.30 p.m. there will be no trading halt at the 10% level and the market will continue trading.
In case of a 15% movement of either index, there will be a 2-hour market halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1 p.m. but before 2 p.m., there will be a 1 hour halt. If the 15% trigger is reached on or after 2 p.m. the trading will halt for the remainder of the day.
In case of a 20% movement of the index, the trading will be halted for the remainder of the day.
The percentages are calculated on the closing index value of the quarter. These percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of Sensex and 10 points in case of Nifty). At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter.
On December 31, 2009, the last trading day of the quarter, Sensex closed at 17464.81 points and Nifty at 5201.05. The absolute points of Sensex/Nifty variation (over the previous day’s closing Sensex/Nifty) which would trigger market wide circuit breaker for any day in the quarter between 4th January 2010 and 31st March 2010 would be as under:
| Percentage (+/-) | Equivalent Points (+/-) | |
| 10 | 1750 | 520 |
| 15 | 2625 | 780 |
| 20 | 3500 | 1040 |
Source: Moneycontrol.com
Courtesy moneycontrol.com
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