Bourses halt trading for first time in 12 years after benchmarks hit circuit breakers on panic selling

Stock market witnessed a halt in trading for the first time in more than 12 years on Friday morning after benchmarks hit circuit breakers on panic selling triggered by concerns over coronavirus pandemic

Press Trust of India March 13, 2020 16:15:10 IST
Bourses halt trading for first time in 12 years after benchmarks hit circuit breakers on panic selling

New Delhi: Stock market witnessed a halt in trading for the first time in more than 12 years on Friday morning after benchmarks hit circuit breakers on panic selling triggered by concerns over coronavirus pandemic.

The BSE and NSE stopped trading for 45 minutes starting from little past 9.20 am.

To curb excessive volatility, circuit breakers are triggered on the basis of three thresholds for stock movement -- 10 percent, 15 percent and 20 percent.

The BSE and the NSE compute the index circuit breaker limits for 10 percent, 15 percent and 20 percent levels on a daily basis based on the previous day's closing level of the index rounded off to the nearest tick size, HDFC Securities said citing regulatory framework.

Bourses halt trading for first time in 12 years after benchmarks hit circuit breakers on panic selling

Representational image. Reuters.

For 10 percent movement before 1 pm, trading is halted for 45 minutes. The break time is 15 minutes for 10 percent movement between 1 pm and 2.30 pm while there would be no halt in case the same happens after 2.30 pm.

As per norms, trading would be halted for 1.45 hours if there is 15 percent movement before 1 pm and 45 minutes for such movement between 1 pm and 2 pm. Trading would be stopped for the day in case the 15 percent movement is on or after 2 pm.

Finally, a 20 percent movement at any point of time would result in complete halt of trading for the day.

Geojit Financial Services Chief Investment Strategist V K Vijaykumar said the last time there was a circuit freeze and trading halt was on 22 January, 2008.

There was also a brief trading halt on the National Stock Exchange on 5 October, 2012 due to a freak trade.

Before trading was halted on Friday, nearly Rs 13 lakh worth investor wealth evaporated in less than 15 minutes of market open.

"Last time, we had a circuit freeze and halt to trading was on 22 January, 2008 when the Sensex had its biggest till date loss of 1,408 points. This was also the first ever four-digit crash in the Sensex. The global financial crisis and fears about a global recession had caused the crash," Vijaykumar said.

HDFC Securities Head of Retail Research Deepak Jasani said halting of trade is basically "cooling down period" for investors.

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