In simple words, a circuit breaker is a limit imposed on stocks or index to trade within the defined range. If this range is violated then that stock or index (In case of Index, trading will be halted on both indices) will come under circuit breaker system.
The index-based market-wide circuit breaker system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by the movement of either the BSE Sensex or the Nifty 50, whichever is breached earlier.
In case of a circuit filters, all your pending orders will be cancelled by the exchanges and your existing positions will remain open until you close the positions provided you have sufficient margins to carry forward. If there are insufficient funds to carry forward the positions then our RMS team shall square off any such positions. For more information on Circuit Breakers over NSE read this.
In the case of commodities, for instance, the base price limit will be 4% for crude (vary commodity wise). Whenever the base daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9%.
In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3%.and informed to the Regulator immediately.