The Festival of Lights – Diwali is an auspicious time according to the Hindu calendar. It symbolizes the victory of light over darkness, knowledge over ignorance, and good over evil.
Like any religious festival, there is a plethora of beliefs, customs, and traditions that surround Diwali. One such tradition is Muhurat trading. Today, we will discuss this tradition and talk about everything that you need to know about it.
Before we answer the question, what is Muhurat trading, let’s look at the term Muhurat. The word ‘Muhurat’ means an auspicious time. In Hindu customs, Muhurat is a time when planets are aligned favorably to ensure positive results.
Muhurat Trading is a common ritual followed by the traders in India. This is a one-hour time that is considered auspicious on the day of Diwali for investing in shares. The stock exchange specifies the time of Muhurat trading every year.
According to beliefs, people trading during this one hour have a better chance of earning wealth and gaining prosperity throughout the year. Typically, this period is during the evening of Diwali and most people prefer buying stocks as a token of Goddess Lakshmi. This is unique to the Indian stock markets only.
When did Muhurat Trading start?
Traditionally, stockbrokers started their new year from the day of Diwali. Hence, they would open new settlement accounts for their clients on Diwali during the auspicious time – the Muhurat.
The broking community would also perform Chopda Pujan or worship their books of accounts on Diwali. There were many beliefs that were associated with Muhurat trading.
The primary among them was that most Marwari traders/investors sold stocks during the Muhurat since they believed that money should not enter the house on Diwali and Gujarati traders/investors purchased shares during this period. While there is no data to back this, in current times, this doesn’t hold.
Today, Muhurat trading has become more of a symbolic gesture than a cultural one because people believe the period to be auspicious. Most Hindu investors do Lakshmi Pujan (pray to Goddess Lakshmi) and then purchase shares of strong companies that can generate good returns in the long-run.
On Diwali, both NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) permit trading for a limited time. Typically, the session is divided into the following parts:
Here is a quick look at the Muhurat Trading time, 2021 for both BSE and NSE:
|Muhurat Trading Session||Capital Market|
|Block Deal Session||17:45 – 18:00 hours|
|Pre-Open Market||18:00 – 18:08 hours|
|Normal Market||18:15 – 19:15 hours|
|Call Auction Session||18:20 – 19:05 hours|
|Closing Session||19:25 – 19:35 hours|
The Muhurat trading Session is a good time to buy or sell stocks since the trading volumes are high. Also, usually, the market is bullish since the festive spirit focused on prosperity and wealth drives people to be optimistic about the economy and the stock markets. Hence, it is a good time for both investors and traders, experienced and new, to benefit from the Muhurat trading session.
For people who believe in auspicious planetary alignments, Diwali is celebrated for bringing in wealth and prosperity. Hence, if you have never invested in stocks, then Diwali can be a good day to begin.
Look for high-quality companies and purchase some stocks with a long-term horizon and in sync with your investment plan. However, if you are planning to enter the stock trading domain, then it might be prudent to observe the markets during Muhurat Trading and probably do some paper trading to get the hang of things. Markets are known to be volatile since the trading window is open for only one hour. Hence, being watchful as a new trader is recommended.
Experienced day traders can benefit from this session since most investors/traders will buy and/or sell stocks as a gesture to acknowledge the auspiciousness of the day.
The focus might not be on profitability as much as it might be on the gesture. Hence, seasoned day traders can make good profits by taking positions after careful consideration. This year has been bad for the economy since the pandemic impacted businesses and livelihoods alike. While many experts are hoping for a good Muhurat trading Session in 2021, you will do well to keep the fervor in your heart and make trading decisions with your head.
Here are some aspects that you must keep in mind before you start buying or selling stocks during the Diwali day trading time (Muhurat Trading).
Happy investing and a very happy Diwali!