Sajjad Bazaz
Marketplaces always witness a boom on the auspicious occasion with fervor and gaiety. In the context of investment matters, a special window of shopping opens on the day of Diwali in the stock market where people get money making opportunities through buying and selling of shares of different companies.
Actually the special window is the one-hour Muhurat Trading session held in the Indian stock markets on the auspicious occasion of Diwali where investors are given the opportunity to make profits by investing and trading of stocks. Muhurat Trading, which ushers in the New Year, is a decades old tradition practiced with a lot of faith and enthusiasm. Investors have fervent belief that it will bring prosperity for the duration of the year and yield delightful returns.
To be precise, it is an old belief that by doing trade during Muhurat trading time, a trader or investor will earn wealth and prosperity the whole year. This session is mostly held during the evening and most of the traders buy stocks during this time. Most of the traders trade during this time for religious, sentimental and traditional reasons.
Since Muhurat Trading is considered to be quite auspicious to invest one’s money, it is also known as the most auspicious time for new traders to do their first trade. One gets to understand the market and can experiment with a small investment. Once a thorough understanding is gained, traders can invest by picking up the best stocks.
While markets are closed on Diwali, both BSE and NSE are open for one hour.
So, amid Diwali 2024 celebrations, the stock market will remain open on November 1 (Friday) for the annual Muhurat Trading session from 6:00 PM to 7:00 PM. However, the time for trade modification will end by 7:10 PM. To be precise, trading activity for the Muhurat trading 2024 is fixed from 6:00 PM to 7:00 PM whereas modification in one’s trade would be allowed until 7:10 PM.
It is worth mentioning that Diwali, according to the Hindu calendar, marks the start of a new year (Samvat) and this session sets the tone for the upcoming year. Observed for ages by the market trading community, this tradition pays respects to Lakshmi, the Goddess of Wealth.
Historically speaking, Muhurat Trading in Bombay Stock Exchange (BSE) started in 1957, when there was no concept of online trading. The traders used to gather at the BSE floor during Diwali, dressed in festive wear and place orders for stocks they intended to hold for at least the next 1 year. The National StockExchange (NSE) started this in 1992.
There are certain precautions to be taken while exploring the Muhurat trading window. It is understandable that investors have fervent belief that Muhurat trading brings them a lot of profit as Sensex would have a bullish trend. So, many buy and sell the stocks on the same day. However, while doing so, one has to be cautious as there are Muhurat Trading sessions where the Sensex has seen a loss. Also, there have been times when the Sensex has dipped after the festival.
Here, the best thing for any investor is to lookout for good company stocks that are showing high returns or good cash flows to invest. While Muhurat Trading is auspicious, it does not mean you put your money in any stock and make profits. There are a few things, as listed by the market experts, to consider before you start trading stocks. In other words, certain things to keep in mind during Muhurat Trading are:
- Since most of the traders and investors consider this time of year favourable for investing, a large number of traders throng the screens and the market can be extremely volatile and directionless. According to the market experts, an investor can take advantage of the volatility by choosing stocks with high trading volume, as the trading window is only one hour.
- One has to be mindful as a day trader. It’s important for an investor to keep an eye on resistance and support levels to make better trading decisions.
- All open positions at the end of the Muhurat Trading session become a settlement commitment.
- The primary investing mantras still hold, and an investor on Muhurat Trading should know a company’s fundamentals before investing.
- Be careful while exploring ‘expert advice’ on investing matters. Be aware of the tips circulated through various media platforms. Many companies tend to advertise their schemes which might not be the best for you without proper consideration. Do not fall for any unauthorized advice whatsoever.
- Experts advise seeking insight from market experts, brokers,etc., or obtaining expertise and knowledge on managing their investments during such times. Even commodities are traded alongside stocks and require the eye of an experienced trader or broker to strategize regarding portfolios.
- Investing during this period does not guarantee returns. Even if the stock performs well on Diwali, its performance in the future will depend on its fundamentals and macroeconomic factors. Invest smartly.
Meanwhile, there are other things which new investors should follow on the Muhurat Trading day. They will come across unsolicited emails and messages containing trade ideas to buy or sell shares. But they need to be careful about what they act upon. Trading with herd mentality and blind faith even on an auspicious day might lead to losses. Since the Muhurat trading window is open only for an hour, it makes sense to research the stocks well in advance before investing. Don’t forget to invest in stocks of different sectors to mitigate risk of losses as stock investing is loaded with high risk.
Happy Diwali! Wishing you success in Muhurat Trading session. Inputs from forthcoming book of the author Straight Talk – Contemporary Banking Decoded
(The author is a veteran journalist/columnist).
