An upper circuit stock is a stock that has reached its maximum price increase for the day, as set by the stock exchange. The upper circuit stocks are attracting the attention of investors globally because of their potential for substantial profits and dynamic trading. It is important to have a deep understanding of these upper-circuit stocks. This article will provide all the necessary information regarding the upper circuit stocks, their nature, functionality, buying procedures, and approaches to increase your returns.
What are Upper Circuit Stocks?
An upper circuit in the stock market is the maximum level a stock can move in a day, indicating that only buyers are present. The upper circuit limit can be set to 20%, 10%, or 5% on the previous day's closing price, depending on the stock exchange's criteria. If a stock breaches its upper circuit, the limit may be lowered sequentially to 10% or 5% to limit excessive trading activity. Lower circuit limits are defined similarly. Once a stock hits its upper circuit, it cannot move higher on that day but can go lower if there is a fresh supply of shares. Stock market apps can track these movements and stay informed. Stock indices like Nifty and Sensex also have 10%, 15%, and 20% circuit limits. If the index hits the lower or upper circuit, trading will be halted for some time.
Disclaimer: This list of UC stocks contains data updated as of April 16th, 2024. However, it's important to conduct thorough research before making any investment decisions in these stocks.
Best Upper Circuit Stocks in India 2024
While past performance isn't a guarantee of future results, here are some NSE stocks that have surged recently, potentially offering interesting investment options.
Hindustan Motors Limited
Starting in Gujarat and later moving to West Bengal, Hindustan Motors (Kolkata) has been a leading Indian car manufacturer since 1948. They are known for the legendary Ambassador, available in diesel, petrol, and CNG, along with the winner mini truck in diesel and CNG variants. The company's revenue skyrocketed by 5876.19% in the last quarter, marking the highest growth in the past three years.
Dhani Services Ltd
New Delhi's Dhani (formerly Indiabulls Securities) is a modern financial firm with a tech-forward approach. Founded in 1995 (originally GPF Securities), they provide stock broking, credit facilities, and various other financial services for sectors like e-commerce and healthcare. They also offer Demat accounts for easy investing and digital payment options for convenience. In the fiscal year ending March 31st, 2023, the company allocated nearly a third (27.29%) of its operating revenue to interest expenses, and over half (57.21%) to employee costs.
Akash Infra Project Ltd
Akash Infra, an Indian civil construction company, builds roads, bridges, and real estate projects. The company secures government contracts in Gujarat through a competitive bidding process. specialising in road construction and repairs, Additionally, their portfolio includes hotels, hospitals, and commercial complexes. In the year ending March 31st, 2023, the company allocated 7.19% of its operating revenue towards interest expenses and 4.83% towards employee costs.
Excel Realty and Infra Ltd
Excel Realty, an Indian company, fulfils three distinct roles, IT support (BPO services), building infrastructure (development projects), and general trading. The company's IT team offers expertise in both customer service solutions and workflow management for their clientele. The stock significantly outperformed the Nifty Smallcap 100 index over the past 3 years. While the stock delivered a return of 243.75%, the Nifty Smallcap 100 only managed 101.93%.
Indo Tech Transformers Ltd
Indo Tech (India) builds transformers for electricity grids. They supply transformers for different industries like power generation and renewables, with various options from 5MVA to 31.5MVA. Indo Tech Trans ended the last quarter of 2023, on December 31st, with a reported income of Rs 140.12 crore and a profit of Rs 10.68 crore.
Rajdarshan Industries Ltd
Rajdarshan Industries, an Indian company, deals with selling quartz and other minerals. They also do drilling and mining, and they also sell various minerals. Their services encompass the extraction and hauling of excess limestone material to be used in cement plants. They also help manage projects, advise marketing, and provide machinery for working with marble and mining in general. The stock significantly surpassed the Nifty Smallcap 100 index over the past three years. While the stock soared by an impressive 391.93%, the Nifty Smallcap 100 managed only 101.93%.
Thomas Cook India Ltd
Thomas Cook (India) is a one-stop shop for all your travel needs from planning your trip to creating entire packages for you. (omnichannel company) Additionally, the company is authorised to conduct foreign exchange transactions. Its business segments comprise financial services, travel and related services, leisure hospitality & resorts, and digiphoto imaging services.
The Financial Services segment focuses on wholesale and retail foreign currency exchange and document transactions. In the year ending March 31st, 2023, the company directed a small portion (1.77%) of its operating revenue towards interest expenses. Employee costs accounted for a more significant share (15.25%) of the company's operating revenue.
Marksans Pharma Ltd
Marksans Pharma is a big player in the pharmaceutical industry, offering medications you can buy yourself (over-the-counter) and those needing a doctor's prescription. They cover many health areas, from cancer and diabetes to heart disease and pain management. The company's doing well financially, with its stock price jumping over 160% in the last three years!
Manaksia Coated metals and industries Ltd.
Manaksia Steels, an Indian manufacturer, focuses on shaping metal for building and infrastructure needs. They're known for their flat steel sheets and coils, which come in various forms: plain steel, galvanised steel for rust protection, and even pre-painted options for a colourful touch. You'll find their products in everything from cars and appliances to building materials. Stock gave a 3-year return of 194.92% compared to the Nifty Smallcap 100, which yielded 101.93%.
Selan Exploration Technology Ltd.
Indian oil and gas company Selan drills for resources in Gujarat. Their crown jewel is the Bakrol field, located near Ahmedabad. Bakrol's underground pockets hold promise, containing ancient oil and gas reserves. In the last year, the company significantly ramped up its investment activities, allocating Rs 71.78 crore, representing a whopping 1071.43% increase year-over-year.
How is the Upper Circuit Limit Determined?
The upper circuit stocks on the NSE are catching the eye of investors today, suggesting that their prices could go up significantly and offering opportunities for trading. The upper circuit limit, which acts as a safety measure for stock prices, isn't fixed forever. Exchanges like the NSE figure it out by considering a few important things.
Previous Day's Closing Price
The upper circuit limit is a percentage increase over the stock's closing price on the previous trading day. The percentage used for the upper circuit limit varies depending on the stock's volatility. Stocks with upper circuit limits that are stable and have a history of steady price movements might have a higher upper circuit limit. This higher limit allows for more natural growth in their prices over time. In comparison, volatile stocks with frequent price swings might have a lower limit to prevent excessive surges.
Stock Price Volatility
Imagine a volatile stock versus a steady one. The exchange considers how much a stock's price typically fluctuates. Volatile stocks get a tighter leash, meaning a lower percentage increase is allowed in the upper circuit limit (2-5%). Conversely, stable stocks might have a higher upper circuit limit (up to 20%) for more natural price movement.
Stock Liquidity
This refers to how easily a stock can be bought and sold. Highly liquid stocks, meaning many buyers and sellers, can handle larger price swings. So, the upper circuit limit for these stocks might be higher compared to less liquid stocks, where a smaller price increase can create bigger imbalances.
The exchange uses a formula that takes these factors into account to determine the daily upper circuit limit for each stock. This helps prevent overly rapid price movements in either direction, protecting investors from getting caught in market bubbles or crashes.
Factors that can Trigger Upper Circuit in the Market
Daily monitoring of NSE upper circuit stocks is essential for traders specialising in volatility strategies. Continuous upper circuit stocks refer to securities that have consistently hit the maximum allowable price increase set by the exchange. Investors looking for stocks with significant momentum can research companies that hit the continuous upper circuit limit. The following factors can trigger an upper circuit in the market.
Stock Soars on Good News
Strong company performance, exciting product launches, or promising mergers can all excite investors and drive a stock's price up quickly.
Market Optimism
When everyone's feeling good about the market, they're more likely to buy stocks, which can push individual ones to their upper limits, especially if they seem like good investments.
Limited Shares, Big Demand
If there aren't many shares of stock available for trading, a surge in buying can quickly send the price to the upper circuit. This can happen if few shares are publicly traded (low float) or big investors hold many of them.
Following the Hype
Rumours and social media buzz can create a frenzy around a stock, leading to speculative buying without considering the company's actual performance. This temporary spike in buying can hit the upper circuit limit.
Short Sellers Feeling the Squeeze
If a stock price unexpectedly rises, investors who anticipated it would decrease (short sellers) might be forced to buy it back to avoid losses. This extra buying pressure can push the stock to its upper circuit.
Factors to Consider while Investing in Upper Circuit Stocks
New investors to the Indian stock market should be cautious when considering NSE upper circuit stocks. While upper circuit stocks might seem like a fast track to profits, there are crucial factors to consider before jumping in.
Limited Trading
These stocks might not trade actively, making buying or selling them quickly difficult. This can widen the gap between the buying and selling price (bid-ask spread), reducing your potential returns.
Uncertain Value
The rapid price rise might not reflect the stock's actual worth. Upper circuits can prevent a stock's true value from being accurately determined, potentially leading you to buy at an inflated price.
Manipulation Risk
Low trading activity and unclear value make upper circuit stocks more susceptible to manipulation. This can cause sudden price swings, impacting your returns negatively.
Downside Potential
Don't be fooled by the initial surge. The stock price may plummet once trading resumes or the rise might not be backed by strong company performance.
Benefits of Investing in Upper Circuit Stocks
Investors closely monitor the market and eagerly anticipate stock upper circuit. The potential benefits of upper circuit stocks are explained below.
Fast Gains
These stocks can experience rapid price increases, attracting investors seeking quick profits. Upper circuit stocks have the potential to surge in price very quickly, making them incredibly attractive to investors looking to score big profits in a short time.
Market Buzz
When overall market sentiment is positive and investors are optimistic, good news about a particular company can create a powerful wave of interest. This excitement can push a stock towards the upper circuit, especially if it aligns with hot industry trends or exciting new developments.
Calmer Trading
The trading pause triggered by an upper circuit allows investors to analyse the situation and make well-informed decisions, avoiding impulsive trades. The pause provides a valuable window for investors to analyse the situation more thoroughly. They can research the news or event that triggered the surge, assess the company's fundamentals, and compare it to similar stocks. This deeper analysis can help them determine if the price increase is justified and if the stock presents a genuine investment opportunity.
Additionally, You can search ‘Today’s upper circuit stocks’ on your trading app to find the upper circuit stock list today, that showcases potential opportunities for traders seeking stocks with restricted price movements.
Conclusion They offer the thrill of rapid price increases and the potential for substantial gains in a short period. However, this excitement comes with a significant dose of risk. The factors fueling the surge of positive news, market buzz, or limited supply can also lead to equally dramatic price drops.
Careful consideration is important before entering the world of upper circuit stocks. Thorough research is essential to understand the reasons behind the surge and assess the company's underlying fundamentals. Now you can track and trade upper circuit stocks directly through an online trading app, making responding quickly to market changes convenient.
FAQs on Upper Circuit Stocks
They can indicate a positive trend, but research the company's health before investing.
Maybe, but it requires good timing and an understanding of market trends.
Volume analysis can show strong buying pressure behind the price increase.
Trading might continue with buy orders only until a seller emerges.
Potentially, but requires thorough research and an understanding of the company's prospects.
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