Muhurat Trading
With the festival of lights around the corner, the buzz is palpable in stock markets. The buzz for Muhurat trading, considered an auspicious time to start something new. Like every year, stock exchanges will conduct one-hour special trading on Diwali in the form of Muhurat trading. Read on to find out more about Muhurat Trading, its timings and other aspects.
What is Muhurat Trading?
Muhurat trading is a symbolic trading session conducted on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) during Diwali. While markets remain closed on Diwali, Muhurat trading is a special one-hour trading session conducted annually on the eve of the festival of lights.
The word Muhurat means auspicious, and the significance of Muhurat trading is deeply rooted in the belief that it's auspicious to start new ventures during Diwali, which also marks the start of the Hindu calendar year called Samvat. It's believed that planetary positions are ideal for commencing new ventures during this time.
Though Muhurat trading lasts only for one hour, it attracts significant interest from investors and traders who consider it encouraging to start something new. Several traders and investors believe buying shares during Muhurat trading will bring good fortune. Some even open new trading accounts to start their investment journey afresh.
Muhurat Trading Timings
This year, exchanges will conduct Muhurat trading on 1st November to kickstart Samvat 2081. As per circulars issued by exchanges, the Muhurat trading time is between 6 and 7 pm, with pre-sessions opening from 5:45 pm to 6 pm. Note that the Muhurat trading session consists of all market segments, including equity, futures & options (F&O), derivatives and securities lending and borrowing, among others.
What Happens During Muhurat Trading?
Here's what typically happens during Muhurat trading:
Block session deal: During this session, two parties decide to purchase or sell a stock at a certain price and inform the exchange about it.
Pre-open session: During this time, which usually lasts for about 8 minutes, the exchange determines the equilibrium price.
Normal market session: The one-hour session is where most of the trading happens.
Call auction session and closing session: While illiquid securities are traded in the call auction session, traders and investors place an order at the market price during the closing session.
Before the commencement of Muhurat trading, several brokers and traders conduct the Chopda Pujan ritual. Here, they worship their trading tools and account books, considered essential for invoking the blessings of Goddess Lakshmi for a fruitful financial year. While the trading sessions operate like a standard market day, there's a festive and celebratory spirit in the air. The session ends with celebrations on the trading floors.
Market Performance During Muhurat Trading
The performance of the Sensex is closely watched during Muhurat trading, and its performance is interpreted as an omen for the new year or Samvat. While there's excitement during this special trading session, the Sensex's performance during Muhurat trading has been a mix of gains and losses. While it had surged in some years, declines were also reported in some years.
Who Can Benefit from Muhurat Trading?
Muhurat trading can be beneficial for:
New Investors: If you are a new investor willing to begin your stock market journey, there's no better time than Muhurat trading to get started.
Long-term Investors: If you are a seasoned investor looking to add reliable stocks to your portfolio, you can benefit from Muhurat trading. Since there is limited volatility, it's an ideal time to add value-oriented stocks.
Traders: If you are a trader, you can benefit from the sentiment-driven price movements during Muhurat trading. This can be beneficial if you know the common buying trends prevalent during the day.
Important Things to Keep in Mind During Muhurat Trading
While there are heightened activities during Muhurat trading with a festive spirit, there are certain things you need to be mindful of while trading or investing during this time. These include:
Choose Stocks Carefully: It's easy to get carried away in the euphoria of Muhurat trading and invest in fundamentally weak stocks. Always stick to fundamentally strong stocks with a track record of delivering consistent performance.
Don't Buy in Panic: Avoid panic buying. Though there's a rush to buy during Muhurat trading, avoid making impulsive decisions. Research well and ensure the stock fits into your overall financial goals.
Set Realistic Expectations: While Muhurat trading is considered an auspicious time to buy, you must set realistic expectations from your investments. Understand that it's more about holding a long-term perspective with your purchases.
Summing it Up
This Samvat, let your portfolio shine bright like diyas with prudent investments made during Muhurat trading. Open a Demat account with HDFC SKY today and make an investment on this auspicious occasion.
This trading app has various tools and platforms to make your trading and investment journey smooth and seamless. Happy Diwali and a prosperous New Year.
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