What is Muhurat Trading?
Stock exchanges BSE and NSE will conduct the once-in-a-year Diwali Muhurat trading on Monday as Diwali marks the beginning of the Hindu accounting calendar year Samvat 2079. While the market will be shut for normal trading to mark Diwali, the special trading window will be open for just one hour in the evening.
Timings for Muhurat Trading
BSE said that the pre-opening session will be conducted from 6 pm-6.15 pm followed by a one-hour trading session between 6.15-7.15. The Lakshmi Poojan will be held at 3:30 pm at the bourse. This would be followed by an award distribution ceremony to top volume performers from 4:45 pm to 5:45 pm.
Significance behind Muhurat Trading
On this day traders retain the age-old tradition of executing trades in the special one-hour session, whose timings are decided based on planetary positions, as it is deemed auspicious to start new business activity in the light of diyas and amid colours of rangoli patterns.
It is customary for stock brokers to perform Lakshmi Puja at the exchange and then the Muhurat trading takes place. It is believed that Goddess Lakshmi comes and resides at the place of puja which is why traders and shopkeepers stay awake with all decorative lights.
Stock brokers perform ‘Lakshmi Puja’ at the exchange and the customary Muhurat trading takes place. It is believed that on the night of Lakshmi Puja, the Goddess comes to reside at the place of the puja during which the traders and shopkeepers stay awake with lights burning all night.
How did it start?
The tradition started with the first traders in the country. A puja is performed, new accounts are opened and new shares are bought on Diwali, marking the start of the Hindu New Year. It is believed that this would begin the new year on a right note.However, this trading has a flip side because it is highly volatile during this session. The Muhurat trading session is an excellent time to buy or sell stocks since the trading volumes are high.
History suggests the day hardly disappointed investors, with the BSE Sensex closing higher in 11 of the last 15 such special sessions. Since 2012, the Sensex has closed in the green zone 7 out of 10 times. On November 4, 2021, the index had advanced 295.7 points or 0.49%.
“Muhurat trading will be lighted up by fireworks from the bulls who are set to charge with the support from the mother market US which was strong last Friday. Financials are again likely to lead the rally since credit growth in the economy is robust and continues to gain momentum. However, investors should be cautious since there are major challenges ahead, particularly rising interest rates and the unknown trajectory of the Ukraine war,” says Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.