Muhurat Trading: Everything You Should Know

Diwali, the festival of lights, is all about new beginnings, prosperity, and success. It’s a time when families come together to celebrate, exchange gifts, and pray for wealth and well-being in the year ahead. But did you know this festive season also has a special meaning for the stock market?

Enter Muhurat trading - a one-hour trading session held on Diwali that investors look forward to every year. This tradition isn’t just about buying and selling; it’s believed to bring luck and mark a prosperous start to the financial year.

In this guide, we’ll walk you through what Muhurat trading is, why it matters, and how you can make the most of this one-of-a-kind opportunity.

What is Muhurat trading?

Muhurat trading is a symbolic trading session initiated by the Bombay Stock Exchange in the year 1957. The National Stock Exchange (NSE) has been conducting this trading since 1992. "Muhurat" refers to "auspicious time" in Sanskrit. This session is scheduled to coincide with a period believed to be astrologically favourable. Many believe that Diwali symbolises the start of a new financial year, known as Samvat. Hence, buying stocks during this time brings wealth and prosperity throughout the coming year.

For many communities, this marks the time when new accounting books are traditionally opened (Chopda Pooja) and prayers are offered to Goddess Lakshmi (the deity of wealth).

Muhurat trading timings 2024

Both BSE and NSE will conduct Muhurat trading for 2024 on November 1, with timings set from 6:00 PM to 7:00 PM. Note that all intraday positions will be squared off automatically 15 minutes before the session's closing time. 

Schedule for Muhurat Trading 2024

*Random closure in the last one minute

What happens in Muhurat trading?

Here's what usually happens during this special trading window:

Pre-open session:

In this approximately 8-minute session, the opening price is established before the market officially opens. 

Normal market session:

It’s a one-hour trading session where most transactions occur.

Make sure to open a demat account beforehand for hassle-free trading.

Benefits of Muhurat trading

Here’s why millions of investors look forward to Muhurat trading each year:

Positive market perception: Muhurat trading aligns with the celebration of Diwali, which symbolises the victory of light over darkness and good over evil. Hence, the market during this time often sees a bullish trend with increased buying activity. 

Symbolic long-term investment: Many investors use this session to initiate long-term positions in fundamentally strong stocks. It is believed that Diwali brings good fortune and marks the beginning of a prosperous year and thus it can be an ideal time to start investments for wealth accumulation. 

Special trading opportunities: Some stocks may see sharp price movements due to the volume of trades executed in a short time. This volatility can bring new opportunities for short-term traders looking for quick gains during the session.

How to make the most of Muhurat trading?

Your profitability during Diwali trading time depends on the strategy you use. Here are some tips to consider:

Research stocks: The trading window is short. Hence, you need to decide in advance which stocks you intend to buy or sell and set your targets accordingly.

Set stop-loss orders: The short trading window can cause the market to experience some sharp price movements. Use stop-loss orders to automatically sell a stock if its price drops beyond a certain point.

Avoid emotional decisions: Given the festive mood around Muhurat trading, some investors might develop the urge to make multiple trades. Stick to your investment strategy and make sure your trades are based on data, not emotions. 

Leverage tech for research: Use digital apps to track stock performance, track real-time price movements, analyse historical trends, check company financials, and set personalised alerts. A data-driven approach means more calculated decisions during Muhurat trading and beyond.

Conclusion

Muhurat trading provides a short but meaningful opportunity for investors to participate in the stock market during an auspicious time. While it holds cultural value, it's extremely important to approach it with smart planning and a long-term mindset. It is wise to avoid impulsive decisions, focus on detailed research, and align your investments with your larger financial goals. Use Muhurat trading to make thoughtful financial decisions that contribute to sustainable long-term growth.

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