<h1 class="ql-align-center"><strong style="color: rgb(230, 0, 0);">Circuit Breaker in Stock Market</strong></h1><p class="ql-align-center"><br></p><h3><strong>Context</strong>&nbsp;</h3><ul><li class="ql-indent-1">Recently after the Hindenburg revelations, many of the Adani Group companies’ stocks have hit the <strong>lower circuits in subsequent trading sessions.</strong></li></ul><h3><br></h3><h3><strong>About</strong>&nbsp;</h3><ul><li class="ql-indent-1">In June 2001, the <strong>Securities and Exchange Board of India (SEBI)</strong> implemented index-based market-wide circuit breakers.</li><li class="ql-indent-1">Circuit breakers are triggered to <strong>prevent markets from crashing due to a panic induced sale of stocks.&nbsp;</strong></li><li class="ql-indent-1">This can happen due to many reasons which lead to stockholders in the market feeling that their stocks are overvalued. Thus they enter into a sell-off.</li><li class="ql-indent-1">Circuit breakers <strong>temporarily halt trading, thereby halting the sell-off.</strong></li><li class="ql-indent-1">Circuit-breakers effectively limit how much a stock's value can fall in a single day/trading session, resulting in a more stable market overall.</li></ul><h3><br></h3><h3><strong>﻿How do these work?</strong></h3><ul><li class="ql-indent-1">This index-based market-wide circuit breaker system applies at three stages of the index movement, at 10, 15 and 20 per cent.</li><li class="ql-indent-1">When triggered, these circuit breakers bring about a coordinated trading halt in all equity and equity derivative markets nationwide.</li></ul><p><br></p><h1 class="ql-align-center"><strong>PRELIMS NOTES:</strong><a href="https://sunyaias.in/notes/prelims-2023" rel="noopener noreferrer" target="_blank" style="color: rgb(0, 102, 204);"><strong>CLICK HERE</strong></a></h1><p class="ql-align-center"><br></p>