Share market basics
The lowest price a stock is allowed to trade at in a session; when hit, sell orders pile up with no buyers and trading effectively freezes.
A lower circuit is the bottom of a stock's daily price band. When the price falls to it, the exchange will not accept orders below that level. Sellers queue at the circuit price, but there are no buyers, so the stock effectively stops trading for the day even though the session continues. It usually follows a shock: fraud allegations, a regulatory ban, a promoter default or a failed deal. A small-cap with a 5% band can hit lower circuit day after day, and holders may be unable to sell for a week or more while the price keeps ratcheting down each morning. A stop loss does not protect you here, because there is no buyer to fill it. This is the concrete risk of trading illiquid stocks on tips. Index-level lower circuits halt the whole market for a set time after a 10%, 15% or 20% fall.
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