Skip to main content

What is a Circuit Breaker in NEPSE? Circuit breaker Rules of NEPSE?

 What is a Circuit Breaker in NEPSE?

In the volatile world of stock markets, mechanisms are needed to prevent panic selling and to maintain order. One such mechanism is the "circuit breaker." For investors and traders in the Nepal Stock Exchange (NEPSE), understanding circuit breakers is crucial for navigating market fluctuations.


 

What is a Circuit Breaker?

A circuit breaker is a regulatory measure used to temporarily halt trading on an exchange to curb panic selling and excessive volatility. When prices move beyond predetermined thresholds, trading is paused, allowing investors to take a breather, gather information, and make more rational decisions. This mechanism aims to maintain stability and investor confidence.

How Do Circuit Breakers Work in NEPSE?

NEPSE has established circuit breaker rules to protect the market from extreme volatility. The circuit breaker levels are based on the percentage change in the NEPSE index compared to the previous day's closing index. Here's a breakdown of the thresholds:

  1. First Level (4% Movement):
    • If the NEPSE index moves up or down by 4% from the previous day's closing, trading is halted for 20 minutes.
  2. Second Level (5% Movement):
    • If the NEPSE index moves by 5% after reopening from a first-level halt, trading is paused for another 40 minutes.
  3. Third Level (6% Movement):
    • If the index fluctuates by 6%, trading is halted for the remainder of the trading day.

These levels are designed to progressively slow down trading, giving investors time to reassess market conditions.

Why Are Circuit Breakers Important?

  1. Prevent Panic Selling: Circuit breakers prevent the market from crashing due to panic selling by giving traders time to calm down and reassess their decisions.
  2. Market Integrity: They help maintain the integrity of the market by reducing the impact of short-term speculation and rumors.
  3. Investor Protection: By pausing trading during extreme volatility, circuit breakers protect investors from significant losses that can occur in a highly volatile market.

Comments

Post a Comment

Popular posts from this blog

Vivah Panchami: Celebrating the Divine Union in Janakpur, Nepal

Vivah Panchami: Celebrating the Divine Union in Janakpur, Nepal Vivah Panchami is a grand and spiritually significant festival celebrated in Janakpur, Nepal. It marks the divine marriage of Lord Rama and Goddess Sita, two central figures in the ancient Hindu epic, Ramayana. Observed on the fifth day of the waxing moon in the month of Margashirsha (November-December), Vivah Panchami draws thousands of devotees from Nepal, India, and beyond to Janakpur, believed to be the birthplace of Sita. Vivah Panchami is not just a festival but a celebration of virtues such as love, commitment, and devotion. The divine union of Rama and Sita symbolizes the harmony between dharma (righteousness) and maya (the material world). Observing the festival is believed to bring blessings, prosperity, and marital bliss. Over the years, Vivah Panchami has attracted international attention, with pilgrims and tourists flocking to Janakpur to witness its grandeur. The festival serves as a bridge between cultures, ...
Post a Comment
Read more

Fishbone Diagram in a Project: A Comprehensive Guide

Fishbone Diagram in a Project: A Comprehensive Guide   Table of Contents 1.       Introduction 2.       History of the Fishbone Diagram 3.       Understanding the Fishbone Diagram 4.       Advantages of Using a Fishbone Diagram 5.       Benefits in Project Management 6.       Steps to Create a Fishbone Diagram 7.       Examples of Fishbone Diagrams in Projects 8.       Conclusion 1. Introduction The Fishbone Diagram , also known as the Ishikawa Diagram or Cause-and-Effect Diagram , is a visualization tool used for root cause analysis in project management. It helps teams systematically identify, explore, and display potential causes of a specific problem or outcome. The diagram resembles the skeleton of a fish, with the "head" representing the issue and the "bone...
Post a Comment
Read more

Top 50 Agile Project Manager/Scrum Master Interview MCQ

Top Agile Project Manager/Scrum Master Interview MCQ   Q1. Shortly after the sprint began, a key stakeholder unfamiliar with Agile practices sent an email to the project team expressing dissatisfaction with the initial work and pushing for changes to both internal and external deliverables. What should the Project Manager do next? A. key stakeholder who is unfamiliar with Agile practices sending   B. Modify the backlog to meet the stakeholders demands. C. Organize a discussion between the product owner and the stakeholder to clarify expectations for deliverables. D. Invite the stakeholder for discussion   Answer: C   Q2. A project team in an Agile environment is experiencing repeated issues with delayed feedback from a key stakeholder impacting Sprint progress. What action should the project manager take? A. Schedule a one to one meeting with the stakeholder B. Inform ...
Post a Comment
Read more