(Circuit limit / Price band) is a price range specified by the exchange for a security or script. It consists of upper & lower price limits which form a range within which the security can move for a given day.
The daily circuit limit for a security differs from one another. Securities based on market capitalization, demand & volatility are distinguished in limits of 2%, 5%, 10% and 20%. And, it goes without saying that orders placed outside the circuit limit will be rejected since security cannot be traded out of its circuit limit.
Example: The price band for a security XYZ is set at 10%. The previous closing rate of XYZ was Rs. 100. So the Circuit limit will be Rs. 90 to Rs. 110. Here the orders can be placed only within this range.