Market Mechanics
Circuit Filter (Circuit Breaker)
A price band that automatically halts trading in a stock or index if it moves too far, too fast.
Exchanges apply circuit filters — typically 2%, 5%, 10%, or 20% — to individual stocks to stop trading temporarily once a stock hits that move in either direction, giving the market time to absorb information and preventing panic-driven price spirals.
Index-wide circuit breakers exist too (triggered by a sharp Nifty/Sensex move), and can halt trading across the entire exchange for a fixed cooling-off period.