Stock Market: What is lower circuit and upper circuit in share market, what are the rules, who benefits?

The stock market has declined these days and investors are under stress. Amidst the fall in the market, investors are afraid that a lower circuit may not take place here. Do you know what is an upper circuit or lower circuit in the share market and why it occurs?

Common investors are sometimes very surprised as to how the share price keeps increasing and decreasing. Due to the supply and demand of most of the shares, the value of the shares keeps on increasing and decreasing. Whenever the demand for shares increases the price increases and when people start selling the share then the value of the share starts decreasing. There are 2 types of circuits in any stock market. The first is the Upper Circuit and the second is the Lower Circuit. The percentage at which this circuit will be charged is decided by the exchange.

What is Lower circuit
Sometimes the shares of a company fall rapidly. In such a situation, there should not be a lot of fall in that stock, so the circuit is installed. In such a situation, suddenly everyone starts selling shares in a company, then the value of that share will decrease to a certain extent and its trading will stop. This limit of decrease in value is called a lower circuit. The lower circuit has 3 phases. It is levied at 10 per cent, 15 per cent and 20 per cent decline.

What is an Upper circuit?
Sometimes the interest of investors in a company increases. In such a situation, the share price of that company starts touching the sky. In this case, there is a provision for an additional circuit. As soon as the share price reaches a certain limit, an upper circuit will be installed in it and its trading will stop. The upper circuit also has 3 phases. It is levied at 10 per cent, 15 per cent and 20 per cent.