Diwali, the festival of lights, is one of the major festivals celebrated in India. It symbolises the victory of light over darkness and is considered an auspicious occasion. We see people loosen their purse strings and indulge in spending on things like electronics and gold during the festival. The Indian stock market, too, has associated Diwali with good fortune and established the tradition of Muhurat trading.
This blog looks at Muhurat trading, its history, the beliefs surrounding it, its timings in 2022, and how one can benefit from it.
What is Muhurat trading?
The word ‘muhurat’ means auspicious beginning in Hindi. It refers to a time when the stars and planets have aligned to ensure positive results. Various versions of ‘shubh muhurat’ exist, including shubh muhurats for marriage, buying vehicles or buying a home.
The Indian stock market, on Diwali, opens for a short trading session of 1 hour called the Muhurat trading session. Typically, the Shubh Muhurat trading session is open during the evening. For most major festivals, the stock market remains closed, but on Diwali, the stock market opens for a short period. BSE started this tradition in 1957 due to sentiments associated with the festival of lights. The practice of Muhurat trading is unique to the Indian stock market. If we look at Muhurat trading’s history, NIFTY 50 has had negative returns only once in the last 5 Muhurat trading sessions.
According to Vikram Samvat, a calendar followed by Hindus and Sikhs, Diwali marks the beginning of a financial year. Additionally, on Diwali, during Chopra Puja, accounting books are worshipped in front of Goddess Saraswati, Goddess Lakshmi and Lord Ganesha to signify the beginning of a new financial year. Thus, the Muhurat trading session is considered an auspicious time for investing.
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Muhurat trading timings
In 2022, Muhurat trading will be conducted on 24th October. This Diwali’s Muhurat trading timings are as follows:
|Type of session||Timings|
|Block deal session||5:45 PM to 6:00 PM|
|Pre-open market||6:00 PM to 6:08 PM|
|Normal market||6:15 PM to 7:15 PM|
|Call auction session||6:20 PM to 7:05 PM|
|Closing session||7:25 PM to 7:35 PM|
What to do during Muhurat trading?
During the Muhurat trading session, typically, the trading volumes are high. Although there will be exceptions, most stocks experience rises in stock prices. High liquidity and rising prices might make Muhurat trading an opportunity to make easy money. However, in the stock market, there are no guaranteed returns.
Those who are planning on engaging in intraday trading would need to strategise well in advance as the window is much shorter during Muhurat trading.
To make sure you make the most of this Diwali’s Muhurat trading session, here’s a list of things you should do:
Maintain a long-term perspective
Although the Muhurat trading session lasts for just an hour, you would be holding a stock for a year or maybe more as an investor. As such, before investing in a certain company during the Muhurat trading session, you must try to understand how it may fare in the months and years ahead. Additionally, since prices tend to rise during the Muhurat trading session, investors should try to make sure they are buying at a reasonable price.
Avoid trading on tips
During Diwali, a lot of us get infected with the festive spirit. Many of us might begin our investing journey during the Muhurat trading session. But, there can always be fraudsters wanting to cash in on their pump-and-dump schemes by spreadings tips and stock recommendations. Investors must be wary of this and invest only after thorough research.
Avoid intraday trading if you are a novice
The Muhurat trading session lasts for an hour. As such, any trading strategy has to be executed with or without modifications in a very short time frame. Seasoned traders might be used to this, but it might be overwhelming for newcomers to the practice. Hence, unless you are a seasoned trader and have a strategy in place, it would be best to avoid or limit trading during the Muhurat trading session.
Take high volatility into consideration
In 2022, Muhurat trading will be conducted on 24th October, a Monday. So, any trades in reaction to the news that broke during the weekend would be acted upon during the Muhurat trading session. Also, some investors might defer entering into certain stocks until the Muhurat trading session opens. Thus, there are chances that trading volumes would be high during the Muhurat trading session, and it might cause prices to be volatile.
Muhurat trading session, the 1-hour trading session open during Diwali, is believed to be an auspicious occasion to make stock market investments. However, we must not forget the basic rules of investing based on research and investing at the right price. Proceed with your caution and the blessings of Goddess Lakshmi!
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Muhurat trading session is the trading session that opens during Diwali. Trading hours, or rather the trading hour for the Muhurat session, will be 1 hour from 6:15 PM to 7:15 PM on 24th October.
Muhurat trading is characterised by high trading volumes, and we often observe the markets going up. But, it should be noted that there are no guaranteed returns in the share market. Muhurat trading or not, investors should proceed with caution and invest based on research.
Unlike other major festivals, on Diwali, trading is possible through the 1-hour trading window of the Muhurat trading session that opens on Diwali evening. Since Diwali is a celebration of light’s victory over darkness, making investments or trades during the Muhurat trading session is believed to be auspicious.
The futures and options (F&O) segment of the market will be open during the Muhurat trading session.