Kathmandu – On the first trading day of the week, there will be two positive ‘circuit breaks’ in the stock market on Sunday. The first circuit break occurred after the NEPSE index rose by 4 percent within 1 minute of market opening on Sunday. After 20 minutes, the market opened again, after increasing by 1 percentage point i.e. 5 percent in 1 minute, the second circuit break occurred. After the second circuit break, the market closed.

On Sunday, there was a circuit break due to the high market. But only when the market increases does the circuit break. Even when the market falls a lot, circuit breaks occur. Circuit break is the system of suspending trading at certain percentage fluctuations so that the investors are not affected too much when the stock market rises or falls rapidly.

Circuit Breaker is a method adopted by Nepal Stock Exchange to control the fluctuations of the company’s share price and the overall market. If the share price of a company increases or decreases by more than 10 percent of the previous day’s closing price, the business of that company cannot increase or decrease further and can be traded within the same 10 percent.

Nepal Stock Exchange has arranged circuit break since 2064 to control the abnormal fluctuations. Before 2064, there was a system in which the stock market could go up and down as much as possible in a single day. After this arrangement, the NEPSE index cannot rise or fall more than 6 percent in a single day. Not only in the overall market, the arrangement of circuit breakers has also been imposed by NEPSE in the companies. If the share price of a company falls by 10 percent, a circuit breaker is installed.

The share price of any company cannot increase or decrease by more than 10 percent in one day. The share price of a company is 100 rupees. If the share price of this company reaches the point of 110 rupees, a circuit breaker is triggered. Even if it decreases, it can decrease from 10 percent to 90 percent. But it does not drop from Rs 100 to Rs 89 in one day. A circuit in the price of one company does not stop the business of other companies. In the first hour of business i.e. between 11 and 12 o’clock by 4 percent, in the second hour i.e. between 12 and 1 o’clock by 5 percent and after that by 6 percent there is a circuit break.