As the stone moves in a vertical orbit, the velocity will change with height (as kinetic energy converts to potential energy).
To maintain the circular orbit, the radial component of force (tension plus component of gravity) must equal the centripetal force required.
If the stone has insufficient velocity at the bottom, there will come a point where you would need "negative tension" in order to maintain the orbit. If you have a rigid rod (rather than a string) this just means that the rod is in compression rather than tension at that point; but if you have a string, the string would go slack and the stone would no longer follow the circular path.
As shown in the diagram, there is a component of force of the gravity that can point either towards the center or away from it; when that component is larger than the force needed to maintain the circular orbit, $\frac{mv^2}{r}$, the stone will continue along the parabolic path as shown (unless the string is rigid so it can provide "push", which is what "negative tension" would be).