Stock exchanges BSE and NSE today halted trading for 45 minutes within less than an hour of market opening after benchmark index Sensex crashed 10% in early trade. Trading had to to be halted on NSE too. This is the second time in two weeks trading in Indian markets had to be halted temporarily. On March 13, trading in the stock market had to be temporarily halted after a sharp fall, the first after around 12 years.
The market-wide circuit breaker system of BSE and NSE applies at three stages of the index movement, either way at 10%, 15% and 20%. These circuit breakers bring about a coordinated trading halt in all equity and equity derivative markets nationwide.
The market-wide circuit breakers are triggered by the movement of either the BSE Sensex or the Nifty 50, whichever is breached earlier.
The Sensex was down 2991 points at 26,924 when trading had to be halted while Nifty50 was down 9.6% at 7,903. The rupee also today weakened past 76 levels for the first time against the US dollar.
BSE and NSE compute the index circuit breaker limits for 10%, 15% and 20% levels daily based on the previous day’s closing level of the index rounded off to the nearest tick size.
After a trading halt, markets re-open with a pre-open call auction session. A 15-minute pre-opening session post each trading halt is held unless trading is halted for the remainder of the day.
Panic over the fast-spreading coronavirus sent Asian equity markets crashing amid fears of a global recession. Wall Street has hit circuit limit multiple times this month, triggering temporary trading halts.
The virus, which originated in China, has spread quickly across the globe, killing several thousand and forcing many countries into lockdown. Financial markets have taken a severe beating over the last few weeks as the virus disrupted businesses across the globe.
The trigger limits and the respective halt duration on BSE, NSE:
10% movement before 1 pm – trading halt of 45 minutes
10% movement at or after 1 pm to 2.30 pm – trading halt of 15 minutes
10% movement at or after 2.30 pm – no halt
15% movement before 1 pm – trading halt of 1 hour 45 minutes
15% movement At or after 1 pm before – trading halt of 2 pm 45 minutes
15% movement – On or after 2 pm – Trading halt for the remainder of the day
20% movement any time of the day – Trading halt for the remainder of the day
(With inputs from livemint)