To curb excessive volatility, BSE on August 26 revised the circuit limit for the share movement of CG Power and Industrial Solutions and five other companies. In a notice, the exchange said it has set a circuit limit of 5 percent for CG Power.
The new limits, effective from August 27 will ensure stock prices do not go up or down beyond a level during a session.
CG Power has been witnessing volatility in its share prices after the firm on August 20 stated that an investigation instituted by its board had found major governance and financial lapses including some assets being provided as collateral and the money from the loans siphoned off by "identified company personnel, both current and past, including certain non-executive directors."
Since then, the stock has seen a spurt in trading activity and hit lower circuit limits in each trading session on BSE.
The scrip on August 26 hit the lower circuit of Rs 8.65, the new 52-week low on BSE.
Apart from CG Power, a limit of 5 percent has been set for GFL, Acewin Agriteck, Opto Circuits (India) and Unitech while a limit of 10 percent has been set for Gallant Ispat Ltd.
Circuit filter mechanism is used by stock exchanges to keep excessive volatility for a scrip in check. It is the maximum fluctuation that is allowed in a stock, after which trading in it gets suspended if the permissible limit is hit in either direction.
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