One of the most important aspects of Diwali is the muhurat trading, which is a special period of trading that takes place on the stock market. This is considered to be an auspicious time to buy and sell stocks, and many people believe that it is a good time to make investments. The muhurat trading period is usually a few hours before Diwali.
Diwali is the festival of lights, a time to celebrate the triumph of good over evil and the return of light and peace after the darkness of winter. In India, it is also the time of year when families and friends gather to share gifts, eat rich foods, and enjoy celebrations.
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What is Muhurat Trading
On Monday, the BSE and NSE will hold a one-hour special muhurat trading session to celebrate the commencement of a new Samvat 2079 – the Hindu calendar year that begins on Diwali. The symbolic trading session would take place between 1815 and 1915 hrs, according to separate circulars from the stock exchanges.
Trading at the mahurat,’ or auspicious hour, is said to bring success and financial gain to the stakeholders.
Markets are considered to be turbulent since the trading window is only open for one hour. As a result, rookie traders should use caution. The emphasis may not be on profits as much as it is on the gesture.
In the same time slot, trading would take place across several segments such as equities, commodities derivatives, currency derivatives, equity futures & options, and securities lending & borrowing (SLB).
Why it is done on Diwali
According to Hindu beliefs, Muhurat is an auspicious season when all the planets and stars are aligned in such a way that market investors would be blessed with good luck and wealth. The trading community considers Diwali’s Muhurat trading hour to be favorable for investment. This year will mark the start of Samvat 2079. On this day, trader communities in India typically create new accounts and shut the existing balance sheet.
While the BSE began the custom of Muhurat Trading in 1957, the NSE began it on Diwali in 1992. Individual traders can now trade during this one-hour special trading session, which has become significant.
India is a country with distinct traditions. “Even in the stock market, we have a unique tradition – Muhurat Trading,” stated Narayan Gangadhar, Chief Executive Officer of Angel One Ltd.
Timings of Muhurat Trading
The one-hour Muhurat trading for Diwali 2022 on the BSE and NSE will take place on Monday, October 24, 2022. According to the BSE and NSE, trading in the equities and equity derivative segments will begin at 6:15 p.m. and terminate an hour later at 7:15 p.m. Meanwhile, the pre-open session will begin at 6:00 p.m. and end at 6:08 p.m.
History of Muhurat Trading
Muhurat trading refers to the auspicious stock market trading for an hour on Diwali (Deepawali), when Hindus in India worship Goddess Laxmi in order to get her blessings. The practice began on the BSE in 1957 and on the NSE in 1992.
According to local brokerage and research firm Axis Securities, Samvat 2079 seems brighter and more optimistic, and the Indian economy is in a sweet spot of development and stays the land of stability against the backdrop of a tumultuous global economy.
The brokerage firm forecasts that the Indian market’s relative outperformance would likely continue in Samvat 2079, driven by favorable macroeconomic conditions and better-than-historical fundamentals of Indian corporates.
Importance of Muhurat Trading
Following Hindu Panchang, the unique trade window opens, signaling the start of a new Samvat, the Hindu calendar year that begins on Diwali, and it is thought that Muhurat trading brings prosperity and fortune throughout the year.
Muhurat trade is done to honor the beginning of the new Samvat. That is when the conventional business community opens its ledgers. According to Hindu astrology, a muhurat is a moment when it is considered auspicious to begin something new or excellent.
Conclusion
Overall, Indian equities outperformed global markets significantly in Samvat 2078, and this outperformance is expected to continue in Samvat 2079, owing to a strong recovery in the Indian economy and domestic liquidity, which will offset FPI (Foreign Portfolio Investors) outflows, according to Manish Jeloka, Co-head of Products & Solutions, Sanctum Wealth.
However, investors should keep in mind that a worldwide economic downturn caused by tightening liquidity circumstances might result in bouts of volatility similar to those seen in Samvat 2078.
Diwali is a time to reflect on our good fortune and appreciate the blessings we have been given. It is also a time to connect with friends and family, express our gratitude, and celebrate our triumphs.