Circuit Breaker Systems in India Circuit breaker is a point at which a stock market will stop trading for a while when the value of a stock drops substantially. It is used by stock exchanges to avert panic selling when investors do large sell offs. This helps prevent market free fall and create a balance between buy and sell orders. HISTORY Circuit breakers were introduced in the market in response to Black Monday, which was an uneventful day, On Oct 19th, 1987; the market plunged 508 points (22%) and lost $500bn in one day. Circuit breakers were introduced in October 1989.
Circuit breakers have evolved and have strict guidelines these days. Circuit breakers were placed at drop points. Which meant if the market dropped by 400 or 500 points, they would come into effect. In 1997, this was given way for a more rational percentage based circuit breaker system. If the market dropped by 10% or 20%, circuit breakers would come into effect. In the US markets, SEC can halt trading if the DJIA drops by 10% before 2.30pm. If the DJIA drops 30% at any pint in the day, trading for the day ends. DJIA has dropped more than 10% only three times in its history.

CIRCUIT BREAKER in INDIA.
They were introduced in 2001 by the SEBI ( Securities & Exchange Board of India). They will apply if the Bombay Stock Exchange or National Stock Exchange moves by 10%, 15% or 20%.
On May 18, 2009, trading on India’s Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) was halted for the full day as the markets hit the 20 per cent circuit breaker after they reopened at 11:55 am. The Sensex zoomed 2,110 points to 14,284 while the Nifty touched 4,323, up 651 points. This was for the first time trading was halted on the BSE and NSE and also the biggest ever single-day gains.