Locking in Upper Ciruit

miththoo · Rich + Posts: 10 Join date: 2008-01-18

Hi ,
I would appreciate if you could explain me what's meant by locking in upper circuit ? How does it happen (I mean if a person buys a single stock at 5% higher price that the previous day, will it hit the UC ) ? Also, if a stock hits UC, say RIIL 5%, then when can I buy it ?

Thanks,
Miththoo

WildFire · Rich + + Posts: 42 Join date: 2008-01-17

Some scrips have circuit limits and they can be like 5%, 10% or 20%. You can view those limits on BSE website. Thats the limits it can vary on any given day, which is based on previous closing price. when it hits upper circuits people know that next day the demand might be more and hence won't sell, and vice versa. I beleive this limits are set by the exchanges to limit the operators activity, but in reality it helps them to manupulate the price.

It doesn't depend on no of shares traded on the limits(upper), thats the maximum price someone can buy or sell on that day(min for lower limits). Hope it helps.

_________________
Man believed that woman is the most efficient money reducing agent until the sensex broke his myth

miththoo · Rich + Posts: 10 Join date: 2008-01-18

Thanks for quick reply.
But then why the trading is stopped for the day (say for JAICORP) if it hits the UC of 5% ?
This means if an operator buys a single stock for 5% higher price than it's previous day price, then will it hit UC ?
Also I read somewhere --"you can not buy this share if it's locked in UC"--what is meant by this ?

Thanks,
Miththoo

WildFire · Rich + + Posts: 42 Join date: 2008-01-17

miththoo wrote:

Thanks for quick reply.
But then why the trading is stopped for the day (say for JAICORP) if it hits the UC of 5% ?
This means if an operator buys a single stock for 5% higher price than it's previous day price, then will it hit UC ?
Also I read somewhere --"you can not buy this share if it's locked in UC"--what is meant by this ?

Thanks,
Miththoo

It's not stopped. You still can buy at that price if there is any seller (basically it's locked because no one is ready to sell) and you can also sell it at that price for sure (as there will be buyers).

consider a scrip at 100rs on previous day closing today it can go 95-105, it doesn't stop at 105, usually there will be more buyers at 105 and no sellers. Why no sellers? because they know next day there will be a higher price than 105 then they can sell( though not true always).

"you can not buy this share if it's locked in UC" because no one will be willing to sell, but you can buy if there are sellers

_________________
Man believed that woman is the most efficient money reducing agent until the sensex broke his myth

miththoo · Rich + Posts: 10 Join date: 2008-01-18

Great !!!!

Thanks a lot !!!!

Miththoo