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CIRCUIT AND CIRCUIT BREAKERS:

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Stock prices of companies listed on the stock exchanges are influenced by several factors like company financials, investor‟s perception of the company‟s growth, industry trends, government regulations and market speculation etc. 

Some factors are predictable and can be studied and analyzed using statistical tools like graphs and techniques like ratio analysis, trend analysis, theory of probability etc. Certain other factors and their influence on prices of a particular stock of the market in general and the degree of their impact are completely unpredictable. 

Since market sentiments cannot be predicted accurately and their impact on stock prices is difficult to judge, sometimes the movement of stock prices can beat all logic and move tremendously in any direction. 

Circuit Breaker is a surveillance system to maintain the unnecessary volatility in the stock market. For example, the BSE Sensex moved up by 2110.79 points on May 18, 2009 after the Parliament‟s election results were announced. The trading had to be halted since the market became extremely volatile and moved beyond reasoning.

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