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Muhurat Trading- Definition, Significance and Session for 2022!

Trading

Megha Parmar

18 Oct, 2022
7 mins read

The festival of immense wealth gains and prosperity is around the corner. A major festival in India, Diwali is well known for its rituals, customs, and traditions, including those associated with trading. One such belief culminates into what Indian traders call “Muhurat Trading”. Wondering what this trading is all about? Let’s take you to the meandering roads of muhurat trading, how to go about it and how it can be beneficial for your trading account.

What is Muhurat Trading?

“Muhurat” is the Hindi word for an auspicious time-bound period. Since the inflow of wealth is considered equally auspicious, so the traders decide to trade for wealth in the start of the Hindu accounting year called “Samvat” via this trading session. Muhurat trading involves sharing trades for one hour during the festival of Diwali.

The significance of muhurat trading comes down to the belief that you are likely to mint profit during this one hour which will be followed by fruitful gains throughout the year. With time, the increasing popularity of opting for muhurat trading has made the stock exchanges specify the timings for every Diwali.

What Happens in Muhurat Trading?

On Diwali, the National Stock Exchange (NSE) as well as the Bombay Stock Exchange (BSE) allow trading for exactly "one" hour. This trading session is the muhurat trading session and is branched out into the following segments:

Session I: Pre-Open

It spans for about 480 seconds i.e., eight minutes to the time duration of a usual market session. Under this session, the stock exchange arrives on an equilibrium price.

Session II: The Block Deal

Under this session, the engaged parties take up the decision of buying or selling a security or an asset at a stagnant price. Then, they seal the deal by informing the stock exchange.

Session III: The Normal Market Session

This is the main segment session wherein the trading of shares and stocks takes place.

Session IV: The Call Auction

Muhurat trading also has a specific segment for trading liquid assets or securities. This session is called the call auction session.

Session V: The Closing

In this session, the traders and marketers decide to place an order at the stipulated closing price.

How to Maximize Benefit From Muhurat Trading?

The best part about this trading session is that it is apt for first-timers as well as for experienced traders. There are sometimes individuals involved in muhurat trading who don't usually show much interest in trading throughout the year, but because of the auspicious angle, decide to trade anyway.

If you are a first-timer or a fresher, then you can cut the mustard down with muhurat trading. You can easily get buyers as well as sellers. Since almost every trader and investor are trading during this time of the day, so experienced traders can take careful positions and take advantage of a situation.

Do’s and Don’ts of Muhurat Trading

While this trading session is capable of bearing fruits, it’s important to be extra cautious during this time. Following is a set of do’s and don'ts one must comply during the one hour of muhurat trading:

Do's of Muhurat Trading

  1. Glance at the companies and filter out the large-cap ones.

  2. Buy a handful of stocks keeping in mind your long-term vision. Make sure that whatever you purchase during the muhurat trading shouldn’t be a mere gesture of purchasing but should be in alignment of your investment objectives.

  3. Since the duration of the session is just 60 minutes, it is ultra-volatile in nature. So, first-timers and freshers should be hawkeyed at the market.

While keeping the do’s in mind, it’s important to mind the don’ts as well.

Don'ts of Muhurat Trading

  1. Don’t go for large orders because this session has a low liquidity.

  2. Most traders get carried away by the merriment around and start trading carelessly. Always remember, whatever trades you take should be in the context of your future investment goals and objectives. So, pay heed to what you are doing during this one hour.

  3. Don’t make trading decisions on the basis of rumours. Rack your brains and then decide.

Things to Keep in Mind Before Engaging in Muhurat Trading

Since there is too much festivity and merriment around you, you are likely to get carried away. Moreover, since this trading session is time bound, you cannot take too much time to land upon a decision. So, here are certain things that you can keep in mind while trading:

  • All the open positions at the closing of this trading session will culminate into settlement and associated obligations.

  • Don’t veil other people’s excitement with their ignorance. Nobody is too naïve to trade in the market.

Be sure to follow trading rules such as using stop losses, studying the market thoroughly, and more when investing in a company. Once you have invested in the long run, then there is no coming back.

Watch Out for This Year’s Muhurat Trading Timings

This year, Diwali will be observed on the 24th day of October, 2022 (Monday). Along the same lines, the stock exchanges have specified timings of muhurat trading for this year.

NSE Muhurat Trading

Session I Pre-Open Session 18:00 to 18:08 PM
Session II Block Deal                17:45 to 18:00 PM
Session III     Call Auction                 --
Session IV Muhurat Trading 18:15 to 19:15 PM
Session V Post-Closing 19:25 to 19:35 PM

 

BSE Muhurat Trading

Session I Pre-Open Session 18:00 to 18:08 PM
Session II Block Deal         17:45 to 18:00 PM
Session III Call Auction           --
Session IV Muhurat Trading 18:15 to 19:15 PM
Session V Post-Closing 19:25 to 19:35 PM

 

Final Words:

So, gear up for this year’s muhurat trading. We wish you and your loved ones a jubilant and prosperous Diwali in advance! Get more detailed information and writeups about Muhurat trading on our FYERS community page by connecting with traders in real-time.

Keep investing and keep trading with FYERS!

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