In the stock market, price bands (also known as circuit limits) are rules established by exchanges to regulate the daily price fluctuations of a stock and mitigate excessive volatility.
When a stock’s price band changes from 5% to 20%, it means the daily price movement limit has been increased, allowing the stock’s price to rise or fall by up to 20% from the previous day’s closing price instead of just 5%. This adjustment is usually made by exchanges like NSE or BSE when the stock experiences higher trading activity or significant price changes.
Increasing the price band to 20% helps provide more flexibility for price discovery while still protecting investors from extreme fluctuations. Below is a list of stocks where the price band was recently changed from 5% to 20%.
1. Nahar Capital & Financial Services Ltd
Nahar Capital & Financial Services Ltd operates as a Non-Banking Financial Company (NBFC-ND-SI) registered with the RBI. The company’s core activities include long-term and short-term investment in securities, lending against various assets like shares and property, and real estate business, such as land and building development and trading.
2. Ishan Dyes and Chemicals Ltd
Ishan Dyes and Chemicals Limited is an Indian company that manufactures and trades specialty chemicals, including phthalocyanine blue pigments and copper phthalocyanine crude blue (CPC Blue) for various industries like paints, inks, plastics, and textiles.
3. Mindteck (India) Ltd
Mindteck India is a global engineering and technology solutions company that provides services in embedded systems, enterprise applications, testing, and IT staffing. It serves a diverse client base, including Fortune 1000 companies, universities, and government entities.
4 Linc Ltd
Linc Ltd is a leading manufacturer of writing instruments, stationery products, and consumer goods in India. The company is known for its innovation and wide product range serving students, professionals, and corporate clients.
5. Iris Clothings Ltd
Iris Clothings Limited is an Indian public company that focuses on designing, manufacturing, branding, and selling readymade garments. They are a prominent Indian player in the children’s wear market under their brand ‘DoReMe’.
6. Onward Technologies Ltd
Onward Technologies is an engineering services company offering product engineering, digital solutions, and IT services. It serves clients globally across automotive, aerospace, and industrial sectors.
7. Orbit Exports Ltd
Orbit Exports is an Indian company that manufactures and exports luxury fabrics and home textiles, specializing in high-end jacquard and dobby fabrics for women’s apparel, home decor, and seasonal crafts.
Why does the price band change from 5% to 20%?
Stocks are moved from a 5% band to a 20% band to better accommodate larger price movements while still managing risk. Here’s why this happens:
- Increased price volatility: When a stock’s price shows bigger swings beyond the 5% limit, exchanges increase the band to 20% to allow natural price discovery.
- Surge in trading activity: Heavy buying or selling can cause sharp price moves, so a wider band prevents frequent trading halts and helps smooth trading.
- Investor protection: While the band is increased, the limit still prevents extremely large, uncontrolled price swings that could harm investors.
- Reduce speculative trading: By adjusting the band, exchanges aim to balance quick trading without causing unnecessary panic or instability.
- Part of regular market monitoring: Exchanges continuously monitor stocks and adjust bands based on their trading patterns to maintain fair and orderly markets.
Written by Sridhar J
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