Diwali Muhurat Trading: Timings, History and Tips

The festival of lights and prosperity is around the corner. Diwali is a major festival in India, well known for its rituals, customs, and traditions, including those associated with trading. Muhurat Trading is one such ritual that is conducted every year during Diwali.  Muhurat Trading will be held on November 1, 2024, from 6 PM to 7 PM.

What is Muhurat Trading?

The festival of Diwali marks the start of the Hindu accounting new year, also called the “Samvat”.

Muhurat Trading is a one-hour trading session conducted by stock exchanges in India, such as the NSE and BSE, on the day of Diwali. The word Muhurat means "auspicious time”. Many believe that successful trading during this hour will bring good fortune and prosperity for the year ahead. It’s more than just a financial event—it's a blend of tradition and market participation with a festive spirit.

Muhurat Trading Timings 2024 on NSE and BSE

The exact date of Muhurat Trading changes each year. For 2024, it's scheduled to take place on the evening of 1st November between 6-7 pm, which coincides with Lakshmi Puja. The session lasts one hour, but stock exchanges typically announce pre-market and post-market sessions before and after the event. 

What Happens in Muhurat Trading?

On Diwali, the Muhurat trading session is divided into the following segments:

Session 1: Block Deal

Under this session, the engaged parties decide to buy or sell a security or asset at a static price. Then, they seal the deal by informing the stock exchange. The Block Deal Session lasts for 15 minutes.

Session 2: Pre-Open Session

The Pre-Open session lasts for 8 minutes. During this session, buy and sell orders are placed, and these prices determine the opening price of a stock.

Session 3: The Normal Market Session

The Normal Market Session is the main segment of Muhurat trading, and it lasts for one hour.

Session 4: The Call Auction (Illiquid Session)

The call auction for illiquid securities will happen during the Muhurat trading session for 45 minutes during the Call Auction period.

Session 5: The Closing

The exchanges specify a closing session that usually lasts for 10 minutes.

History of Muhurat Trading

Muhurat Trading isn’t a modern-day invention. This unique trading session has roots in ancient Indian tradition, when Diwali was viewed as a day of new beginnings, particularly for people from the business community and traders. On this day, accounts were balanced, and prayers were offered to Goddess Lakshmi, the deity of wealth and prosperity.

The tradition entered the stock markets to mark the importance of wealth creation in the modern era. The stock exchanges first formally recognised Muhurat Trading in the 1950s, which has continued yearly, regardless of market conditions. For many, it's a nostalgic reminder of Diwali’s role in financial planning and blessings for future gains.

Tips for Muhurat Trading

The trading session is suitable for both first-timers and experienced traders. Some individuals participate in Muhurat trading due to the auspicious timing, even if they don't usually trade throughout the year. First-timers can find buyers and sellers easily, while experienced traders can take careful positions and benefit from the increased trading activity.

While this trading session can bear fruit, being cautious is essential. Here are some tips that could help you with the Muhurat Trading session for 2024.

• Buy Well-Established Stocks: If you're looking to invest during this period, consider buying stocks of well-established companies known as Blue Chip stocks. These companies have a history of strong performance and stability. Buying shares of a reliable company could be an excellent way to participate in the Muhurat session without taking on too much risk.

• Focus on Long-term Gains: Instead of trying to make quick profits, consider the long-term growth of your portfolio. Since Muhurat Trading is more symbolic, many seasoned investors buy and hold stocks they plan to keep for the year ahead, aligning their trades with their investment goals for the future.

• Avoid Impulsive Trades: With the festive buzz, there’s a chance you might get swept up in the excitement and make impulsive decisions. Stick to your strategy and avoid trading purely based on emotions. Ensure that you’ve researched the stocks you’re interested in.

• Keep an Eye on Market Trends: Even though this session is mainly ceremonial, it’s still crucial to stay aware of broader market trends. Sometimes, certain stocks may experience small price fluctuations, giving you a good opportunity to purchase shares at an advantageous price.

• Limit Your Trading Activity: Since this session lasts just an hour and is more about the sentiment of the occasion, don’t feel pressured to engage in heavy trading. A token trade might be all you need to symbolically mark the occasion, and it can align with your long-term strategy. Make judicious use of trading rules like setting appropriate stop losses and using trading indicators to take well-informed trades.

• Be aware of settlement and other obligations: All the open positions at the closing of this trading session will culminate into settlement and associated obligations. It is important to keep that in mind while trading.

Conclusion

Muhurat Trading in 2024 is an event that goes beyond just numbers on a screen. Whether you're an experienced trader or a newcomer, this one-hour session during Diwali can offer a chance to reflect on your financial goals for the upcoming year. Just remember to trade wisely, keep a long-term perspective, and enjoy the festive spirit that comes with it.

So, mark your calendars for November 1st this year and join the FYERS trading community in celebrating Diwali in the most auspicious way possible through Muhurat Trading!