3.12What is an upper circuit?
1What is it?
A stock hits its upper circuit when it reaches its maximum allowed rise for the day.
2Why does it exist?
At the upper circuit there are only buyers and no sellers. You cannot buy because nobody is selling at that price.
3Stock market example
A small company with a 5% band announces a big order. The price jumps from ₹100 to ₹105 and freezes. Buy orders pile up; there are almost no sellers.
4Risks
- Small stocks hitting repeated upper circuits are sometimes being manipulated ("pump and dump"). Be careful.
5Quick revision
- Upper circuit = max rise reached.
- Only buyers remain.
- Repeated upper circuits in tiny stocks can be a warning sign.
6Knowledge check
Q1. Can you easily buy a stock stuck at upper circuit?Show answer
Usually not; there are no sellers.
Q2. What scam often involves repeated upper circuits?Show answer
Pump and dump.
Q3. Previous close ₹50, band 20%. Upper circuit?Show answer
₹60.