Definition
Circuit-to-Circuit Stock
A circuit-to-circuit stock is one that repeatedly hits its upper or lower price band day after day, often with little or no trading in between.
When a stock locks in the upper circuit repeatedly, buyers far outnumber sellers and you usually cannot buy; when it locks in the lower circuit, sellers can't exit, the price keeps falling each day with no buyers. Both trap investors and are common in low-float small-caps.
Such behaviour is frequently linked to pump-and-dump schemes or panic, which is why exchanges apply ASM/GSM surveillance. Being stuck in a series of lower circuits, unable to sell, is a serious liquidity risk to understand before buying speculative stocks.
Related terms
- Price Band / Circuit Limit (per stock)A price band sets the maximum percentage a stock can rise (upper circuit) or fall (lower circuit) in a single trading day.
- Pump and DumpPump and dump is a manipulation scheme where operators inflate a stock's price with hype, then sell their holdings to unsuspecting buyers, crashing it.
- Graded Surveillance Measure (GSM)The Graded Surveillance Measure is a SEBI/exchange framework that imposes escalating restrictions on securities with weak fundamentals or abnormal price behaviour, moving them through stages of increasing severity.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.