Muhurat is the most auspicious time of the day to do or start something. What about the most auspicious time to trade on the most auspicious of days, Diwali? That's what Muhurat trading is all about.
On the day of Diwali, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) opens briefly for a special session of trading. For avid traders, it is an integral part of their Diwali celebrations. For investors, too, an investment made during Muhurat trading holds special significance.
BSE institutionalised the tradition of Muhurat trading in 1957 with the special short- duration trading session. NSE started this tradition more than three decades later in 1992. Since then, Muhurat trading has been one of the special Diwali attractions for traders and investors.
The special bell is generally rung by a person of repute. The stock exchanges are adorned with floral decorations, while their floors are lit up with colourful rangoli patterns.
Most traders and investors worship the Goddess of Wealth, Lakshmi, during the time leading up to Muhurat trading. Hindus consider Goddess Lakshmi as the bearer of good fortune and prosperity. The outcome of Muhurat trading itself is seen as an indication of trading fortunes about to unfold in the year ahead.
It must be mentioned that Muhurat day trading is generally considered to be a session of token investing and trading transactions. Therefore, the trading volumes during these sessions are comparatively low as most participants buy only token amounts of stock or trading positions.
Muhurat trading typically lasts for an hour, while the day depends on the Diwali dates. As Diwali celebrations do not follow the Gregorian calendar, Diwali and Muhurat trading date changes every year. BSE and NSE announces the timing of Muhurat trading in advance. The trades and transactions carried out during Muhurat trading are governed by the same rules and regulations of the Securities and Exchange Board of India (SEBI).
Since 2018, Sensex has witnessed a positive closing of 0.45% to 0.7% in the Muhurat trading session every year. Last year the BSE index had a near-flat closing of 0.04% at the end of Muhurat trading.
Unlike a typical trading day, Muhurat trading doesn't follow the 9.15 am to 3.30 pm schedule. While the normal market session lasts for an hour, several other activities combine to give Muhurat trading a longer stint during Diwali day. Here are the various stages of Muhurat trading, along with the timings followed for the same during the last year's Muhurat trading.
A block deal session is the period during which two parties decide to buy and sell a significant volume of security for an agreed price. Consequently, they are also required to inform the stock exchange about it. Last year, the time slot for Muhurat trading was 5.45 pm to 6.00 pm, 24 October 2022.
As mentioned earlier, Muhurat Trading has seen a positive response in the last few years. However, it doesn't mean that you get a God-bestowed golden touch for the day. It is like any other regular trading session and your Muhurat trades may still fall flat. And you wouldn't want to incur a loss on the auspicious occasion of Diwali.
Light the Diya, but don't forget the candlesticks!
Muhurat means an auspicious moment, and your personal muhurat may not necessarily be during the muhurat trading hour. It is an hour of frantic excitement and you should experience it first-hand. But keep the much-needed poise in your trading decisions as you dive into Muhurat trading. It will help you to come out with a positive trading result and make your Diwali celebrations even more joyous.