Upper Circuit
The hardest price ceiling a stock can hit in a single session — beyond which trading freezes and sellers become scarce.
Definition
The upper circuit is the highest price at which a stock is permitted to trade during a single trading session on NSE or BSE. It is one half of the circuit limit mechanism, with the other being the lower circuit. When the last traded price reaches the upper circuit level, the exchange freezes all new buy orders above that price, and the stock is said to be "locked at upper circuit." Trading either continues at that exact price (if sellers are willing to sell there) or stalls entirely due to an absence of sellers.
Why it matters
For equity traders, hitting the upper circuit means they cannot buy more of the stock at any price — but for options and futures traders in the same stock, the consequences can be severe. All derivatives contracts on a stock that is locked circuit cannot be traded either, because the underlying price is frozen. A trader short on call options of that stock faces accelerating losses with no ability to hedge by buying the underlying or rolling the position.
Upper circuits also create asymmetric liquidity: the entire order book is buyer-heavy. There may be millions of shares worth of buy orders queued at the circuit price and zero sellers willing to offer stock there. This means any trader who urgently needs to exit a short derivatives position has essentially no recourse within that session. The situation typically resolves only at the next day's open when the circuit resets based on the new previous close.
SEBI also has a mechanism where exchanges can expand circuit bands intraday if a stock is locked at circuit for an extended period — this is called a circuit filter relaxation. Traders monitoring a locked stock should watch for exchange announcements about expanded bands, which briefly open trading again at a higher price range.
How it works
Each morning, NSE calculates the upper circuit price as: Previous Close × (1 + Circuit Band%). For a stock in the 20% band closing at ₹500, the upper circuit for the next session is ₹600. Orders submitted above ₹600 are rejected by the order management system before they match. If the first trade of the day itself opens at ₹600 — say due to a gap-up open — the stock locks at upper circuit from the very first minute.
Example
Suppose a pharmaceutical company announces a major drug approval after market close. Its shares closed at ₹800 the prior session, and NSE has assigned it a 20% circuit band. The next morning the upper circuit is ₹960. Buyers flood in at open, and the stock trades at ₹960 within seconds. The entire order book shows 50 lakh shares of buy orders at ₹960 but only a handful of sell orders. Trading technically continues at ₹960, but almost no shares change hands. Options writers on the stock's calls watch their positions go deep in-the-money with no ability to hedge.
Track circuit-prone stocks before they move
TradePulse shows open interest build-up and PCR shifts that often precede sharp directional moves — including circuit scenarios.