When trading stops
Markets have brakes. A 10% index move halts everything for an hour, a 20% move ends the day, and individual stocks have bands of their own — rules written down in advance so that nobody has to decide in a panic.
Chapter 9 · Advanced
Every previous chapter described a market running normally. This one is about the rules for when it is not — and they are worth knowing precisely because they are written in advance, by people who were calm at the time.
The market-wide circuit breaker
SEBI's master circular for stock exchanges, chapter 1, read 29 September 2026, sets it out:
These circuit breakers are used to stop extreme movements either way. The circuit breakers are applied at three stages of the index movement either way at 10%, 15% and 20%. The market wide circuit breakers would be triggered by movement of either BSE Sensex or the NSE Nifty 50 whichever is breached earlier.
Two details in that sentence that people get wrong. It applies either way — a violent rise halts trading exactly as a fall does. And it is triggered by whichever index breaches first, not by both.
The halt length depends on when the move happens:
| Move | Before 1 PM | 1 PM to 2:30 PM | After 2:30 PM |
|---|---|---|---|
| 10% | 1 hour | ½ hour (until 2:30) | No halt |
| 15% | 2 hours | 1 hour (until 2 PM) | Rest of the day |
| 20% | Rest of the day | Rest of the day | Rest of the day |
The logic is consistent: the earlier in the session, the longer the pause, because there is more day left in which people can think. A 10% move in the final hour halts nothing at all — there is not enough session remaining for a pause to achieve anything.
The limits are recalculated daily from the previous close, so "10%" always means 10% from where the market actually starts.
What happens to your orders
This is the part almost nobody has read, and it is in the same circular:
In the event of breach of market-wide circuit breaker limit, stock exchange shall stop matching of orders in order to bring about a trading halt as mandated above. All unmatched orders present in the system shall thereupon be purged by the stock exchange.
Purged. Your resting limit order does not wait politely through the halt — it is cancelled. When trading resumes you are not in the queue, and if you still want the trade you have to place it again.
The exchange also computes the index after every trade in a constituent stock and checks the limits after each computation, so the halt lands on the tick that breaches rather than at the end of some interval.
Resumption
Trading does not simply switch back on at the previous price. It resumes through a pre-open call auction — a window in which orders are collected and a single opening price is computed before continuous matching restarts.
The reason is the same as the halt's: after a violent move, restarting with continuous matching would hand the first price to whoever was fastest. An auction collects everyone's intentions first and strikes one price.
Individual stocks have their own limits
Beyond the market-wide breaker, individual scrips have price bands — a maximum move permitted in a session — and dynamic price bands that constrain how far a single order can move a price within the day.
The effect is that a stock can be "stuck" at its band: quoted, but with orders only on one side and nothing trading. A stock locked at its upper band has buyers and no sellers, and a stock locked at the lower band has the opposite — which is a far worse position to be in, because it means you cannot sell at any price the band allows.
This is the mechanism behind an uncomfortable fact: in a genuine collapse, "I will just sell" may not be available to you. Chapter 9 of Finance 101 called liquidity the thing that turns volatility into permanent loss, and a locked band is that idea with a rule number attached.
Why the brakes exist
Not to prevent losses, and not to set a price anyone thinks is right. They exist to insert time.
A fast, self-reinforcing move — falling prices triggering forced sales, triggering more falls — is a mechanical process rather than a considered one. A halt breaks the loop and lets information reach people who are not watching a screen. Whether the price is the same afterwards is not the point; whether it was reached by decision rather than by cascade is.
The honest limitation: brakes do not stop a market from arriving where it was going. They stop it arriving there in four minutes.
The point
10%, 15% and 20% on Sensex or Nifty 50, either way, with the halt longer the earlier it happens; resting orders are purged; trading resumes through an auction; individual stocks have bands of their own. All written in advance, by people who were not panicking at the time.
Check yourself
4 questions. Every answer is explained afterwards, including the ones you get right — guessing correctly is not the same as knowing. Score 70% or more and the chapter is marked done.
Question 1 of 4
0 of 4 answered. You can submit with questions unanswered — they simply score zero.
Now do it with your own numbers
Work out what happens to a limit order you placed this morning if a market-wide halt is triggered at 11 am. Then decide what you would want to happen — the answer the rules give may not be the one you expected.
The circular is explicit about unmatched orders. It is the detail most investors have never read.