The Hindu Business Line : Circuit filter data present negative picture

Chennai, Aug. 21 The reading of circuit summary does not bode well for the market. Probably the lone indicator that was positive so far, paints a grim picture now, with 355 stocks hitting lower circuit filter against 154 that hit the upper circuit on the BSE on Tuesday.

If a stock hits upper circuit filter, it means there are no sellers and only buyers; vice-versa if it hits a lower circuit filter.

According to market observers, the circuit summary has turned negative after quite a long period.

Even on days when the markets were tumbling heavily, after July-end, the stocks those hit upper circuit would better the number of stocks that hit lower circuit by a 3:1 margin.

Today, the ratio turned in favour of sharp decliners by 2:1. This, according to observers, indicates that the selling, which was largely confined to large-cap stocks in the recent past, is slowly percolating to mid- and small-cap stocks too.

As many as 156 stocks from the B2-group hit lower circuit, while the T-group accounted for 89, followed by Z-group with 39 stocks.

For the upper circuit, the B2-group accounted for 62 stocks, T-group 41 and Z-group 34.

The total number of traded stocks on the BSE was 2,794.

While there are no circuit breakers for A-group (or large-cap stocks), majority of mid- and small-cap stocks (which are not part of derivative trading) attract circuit filter.

As per the guidelines issued by SEBI, the exchanges are required to apply a daily circuit filter of 20 per cent on all the stocks except those on which derivative products are available.

“The imposition of circuit filters on scrips ensures that the price of the scrip cannot move upward or downward beyond the limit set for a day,” according to the BSE Web site.

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