Stock Exchanges such as BSE and NSE have set up a price band every day to protect investors from a single day's reactive drop or hike in share prices.
The price band is set up depending on the last traded share price. For example, the upper circuit is the maximum possible price the stock can trade on a designated day. Moreover, the lower circuit is the minimum or lowest possible price the stock can trade on that day.
Based on their criteria, stock exchanges set up limits for stock at 5%, 10%, or 20% on either side. Moreover, a stock that hits the upper circuit has only buyers and no sellers. For example, positive news could lead to high demand for the shares of a particular company, and it hits the upper circuit. A stock hits the upper circuit if there is a higher demand for its shares as compared to the supply,