Diwali – the festival that brings light, joy and prosperity to millions of Indians - is finally here! For Investors, there is one more reason to celebrate on this occasion as it is time for “Muhurat trading”, a unique tradition that many investors ardently follow.
Originating from the Hindi word 'Muhurat', which means 'an auspicious moment,' Muhurat trading denotes the traditional notion of a lucky hour when planets are believed to be in a favourable alignment. To set the tone for a successful fiscal year, the players in Indian stock market make symbolic purchases during this hour, frequently in blue-chip firms. During this time, the trade is seen as a source of stability and prosperity that goes beyond simple financial gain, and ties the investors to cultural customs.
Each Diwali, both the Indian stock exchanges, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange), host a special one-hour trading session called “Muhurat Trading”. The tradition aligns with the beginning of the Hindu New Year, inviting prosperity, luck, and success through a symbolic act of investment.
- What Makes Muhurat Trading Significant?
To start a new beginning, the stockbrokers traditionally opened new settlement accounts on Diwali. This would be initiated by the Chopda Pujan, which entailed worshipping account books, symbolizing monetary benefits for the coming year. This eventually developed into the Muhurat trading session, one of most the busiest time for retail investors.
From one Diwali to the next, investors keep a careful eye on Muhurat Trading's returns, frequently viewing it as a gauge of the year's market mood.
Historically, the trend has been largely favourable, which is indicative of the upbeat mood of the times. The market's conviction in long-term wealth development through stock investments at this auspicious time was reinforced by the fact that eight out of ten Muhurat sessions concluded with gains between 2014 and 2023.
Over the previous ten years, the Sensex and Nifty 50, India's primary market indices, have seen an average Muhurat-to-Muhurat return of 11–13%. Since it covers both bullish and bearish years, this number is very significant because it shows how resilient the indexes are and how investors continue to have faith in Diwali assets.
- Muhurat Trading Timings for 2024 subject to NSE Notification
- Timings: This year, Muhurat Trading is scheduled from 6.00 PM to 7.00 PM on November 1, 2024.
Session Timings:
- Pre-Opening Session (For IPO and prelisted security) - 5.45 PM – 6.30 PM
- Muhurat Trading Session - 6.00 PM – 7.00 PM
- Block Deal Session - 5.30 PM – 5.45 PM
- Call Auction Illiquid Session - 6.05 PM – 6.50 PM
- Closing Session - 7.10 PM – 7.20 PM
- Trade Modification Cut-off Time - 6.00 PM – 7.30 PM
- What happens during the Muhurat Trading?
Pre-Opening Session: Before Muhurat Trading officially opens, buy and sell orders are gathered during this session. These orders are used by the stock exchange to establish an equilibrium price, which lessens volatility after normal trading starts.
Muhurat Trading Session: During Muhurat Trading's primary event, investors actively purchase and sell equities for around an hour.Many people take part symbolically to celebrate good fortune, emphasizing long-term investments above short-term profits.
Block Deal Session: In this session, two parties engage in trades directly at a predetermined price usually negotiated in advance. The exchange must be notified of these transactions as block deals.
Call Auction Illiquid Session: This is a dedicated trading session for illiquid equities, particularly those with little market interest and low trading volumes. Based on demand, the exchange determines fair pricing for these securities using an auction method.
Closing Session: At the conclusion of the Muhurat Trading, traders and investors can choose to place orders at the closing price. This offers a final chance to purchase or sell equities at a price that corresponds with the closing sentiment of the market.
Trade Modification Cut-off Time: Brokers and participants have a brief window after the trading session ends to make small changes or fix any trade-related issues. Final trade changes are permitted during this session before they are locked in for settlement.
- How do you participate in the “Muhurat Trading”?
To participate in Muhurat Trading on November 1st, investors should ensure they have a trading account linked to a Demat account.
Once your account is set up, keep an eye on the exchange announcements for the specific timing of the Muhurat Trading.
Be prepared to make your trades during Muhurat Trading session, focusing on quality stocks that align with your long-term investment strategy.
Consider opening a Demat account that provides a user-friendly platform and excellent customer support. With South Indian Bank's quick account opening process, you can be ready to take part in this special trading event in no time!
Muhurat trading offers a unique blend of cultural tradition and financial strategy, embodying the optimism of Diwali and the start of a new financial journey.
By aligning investments with auspicious timing, Indian investors connect with tradition while looking ahead to a prosperous future.
Happy Diwali and prosperous trading!
Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.