There are many cultures and traditions all over the world among different religions. One of the festivals in India is the Festival of Light – Diwali. This is an auspicious day which symbolizes good over bad. According to the Hindu calendar, this day is also called the start of a new year.
Muhurat refers to an auspicious time when a task has a chance of maximized success. Seeing this, Dalal Street came up with the idea of trading on one of the most auspicious days in the Hindu Calendar in 1957.
Among the various rituals performed on the day of Diwali, the tradition of Muhurat Trading, which started in 1957 in the Bombay Stock Exchange (BSE) and later in 1992 in the National Stock Exchange (NSE) has become one of them. It was the Gujaratis and the Marwaris who were the ones who first started trading on the day of Deepawali, and then with time, things changed, and now almost all the investors invest during the hour.
After doing Lakshmi Puja, the investors worship their books, pray for a great year, and then buy stocks of a strong company that will provide them income in the long term.
The Muhurat Trading is exclusive to the Indian Stock Market. It happens every year on the day of Deepawali (the date and time changes every year), and the market opens for an hour, mainly in the evenings.
During the period of block deal the two parties agree on a fixed price to buy or sell a security (usually of 15 minutes). After this period is over during the pre-open session the equilibrium price is determined by the stock exchange.
It is generally 7-8 minutes. Then the main trading session of 1 hour opens where most of the trading takes place. In the post-closing session (of approx. 10 minutes), the investors can place an order on the closing price.
The Muhurat Trading will take place on October 24, 2022. (Diwali – Laxmi Pujan). Timings for muhurat trading trading session is between 18:15 – 19:15.
A few things should be kept in mind before divulging into investing on the day of muhurat trading. Some of them are:
It is suggested that investors should invest in quality stocks and look into some shares of the blue-chip companies (a company with constant returns) as they are said to rise in the long term.
Over trading should be avoided during this period as the open window of trading is very small.
Only small purchases should be made.
The token purchase should be made as they bring prosperity and give the investor a decent return.
Large orders should not be placed as liquidity is very limited as the market is only open for 1 hour.
There is excitement in the market, thus making rumours spread very high. Investing decisions should be made by the investor based on data provided by primary sources, not secondary sources.
The decision to invest should not be rushed as it is a matter of your hard-earned money.
The decision of investment should be made by thinking and analyzing by the head and not by the heart.
Diwali is a festival known for winning of light against the darkness thus it leaves a lot of positive energy and attitude among the people about the economy and the stock exchanges as well.
The trading volume on this day is high so it is highly recommended to buy or sell securities during this time.
The market is expected to close at a high. Thus, it is suggested by the trade gurus to buy shares of the company with a great fundamental value and the chances of high return in the future (say 5 – 10 years).
Many people benefit on this day as some irregular and new investors join the trading game.
Diwali is a time of festivity and excitement for many people in the country with so many traditions that are followed, trading on this time is just one of them. Muhurat Trading takes place once a year, and it is a perfect opportunity for new investors to start trading with a small amount of money and purchase a token which gives them a return.
At this time, the investors need to buy/sell as it tends to be in a bullish market.
Investors who are new and experienced should make the best of the opportunity that the stock exchanges in India have provided them.
To conclude, Muhurat Trading in today's time is a part of Diwali rituals, and many people invest on that day even if they are not active for most of the year.
Happy Trading and a very Happy Diwali...
Every year on the day of Diwali the stock exchange opens for 1 hour for trading.
Timings of Muhurat Trading session is between 18:15 – 19:15.
In 1957, Muhurat Trading opened for the first time in BSE, and subsequently, in 1992, NSE started the practice.
Their main belief is to invest for the long term or to gift them to their loved ones or pass them to the next generation.
There is no rule in which it is said that Intra – day trading is not allowed, but due to the short window of market opening, investors generally avoid this trading.
