Clear Cut Majority to UPA and no part of Left Parties in next government has given a great boost and confidence among the investors. Which has pushed the BSE and the NSE to Upper circuit, 1st time in the history of Indian stock trading.
It is now clear that Left parties will not have any role in next government and reformist Manmohan Singh will once again lead the nation without any hurdles for next five years. He will be able to firm on his decisions and won’t have to bow in front of any ally. He will be able to take decisions about disinvestment which had gone under the files during the support of left parties as they were opposing the disinvestment, he can also decide for more economic reforms now and last not the least will be able to give a stable government.
These are the few things which has given a great confidence to market and investors and lead the stock exchanges to upper circuit. 1st it was decided to stop trading for 1 hour but later it had changed into 2 hours but when second time market opened, it again gained large points and exchange bodies had to decide to close the trading for whole day. Which means markets will open tomorrow.
What is circuit breaker?
It is a system to curb excessive speculation in the stock market, applied by the stock exchange authorities, when the index spurts or plunges by more than a fixed limit. Trading is then suspended for some time to let the market cool down. If the market changes more than 10%, trading is halted for one hour; more than 15% trading is suspended for 2 hours. Although introduced in November 1992, it was used for the first time in the Bombay stock Exchange on Tuesday, 9 March 1993 when the sensex declined by more than 5% from the opening level, i.e. from 2451.20 to 2318.26. At that time, the circuit was 5%.